BARBARA RODRIGUEZ

Associated Press

Iowa is preparing to notify families in early February that federal money could run out soon for a health insurance program that covers roughly 60,000 low-income children in the state, though officials are also hopeful congressional action early in the new year will make such contingency plans unnecessary.

The Iowa Department of Human Services has drafted letters that could be mailed out to families about dwindling money for the Children's Health Insurance Program, known nationally as CHIP and as hawk-i in the state. The program is aimed at children from families with incomes too high to qualify for Medicaid.

Iowa officials expect money for hawk-i to run out at the end of March or possibly April without more federal funding, according to DHS spokesman Matt Highland. He said the agency is still reviewing how newly approved short-term federal funding will affect hawk-i's latest finances. The extra money, which DHS is reviewing, could delay notification to families until March. The state wants to give families 60 days' notice.

The department also has an internal work group exploring options such as whether to recommend freezing hawk-i enrollment, switching all affected kids to Medicaid or ending hawk-i entirely.

If the state ends hawk-i, about 16,000 children enrolled in the program will be eligible for Iowa's expansion of Medicaid. But the families of about 44,000 children would need to seek other coverage, such as enrolling kids into the insurance marketplace under the Affordable Care Act.

Brenna Smith, press secretary for Republican Gov. Kim Reynolds, said the governor does not support any of the contingency options being floated by the department. In a statement, Smith added that Reynolds "expects Congress to do the right thing and approve this funding, as they have always done in the past."

Iowa was so close to running out of CHIP money recently that DHS considered mailing notifications to families in early January. That's because some of Iowa's reserve funds for CHIP were being tapped to help pay for other state programs that were running out of money more quickly, according to a department official who spoke at a Dec. 18 hawk-i board meeting.

Iowa was set to run out of money in February, according to audio from the meeting obtained by The Associated Press. Those plans were put on hold after Congress approved roughly $2.85 billion at the end of December.

Joan Alker is the executive director of the Georgetown Center for Children and Families. She said other insurance options for low-income children in Iowa and elsewhere will not match the comprehensiveness or affordability of CHIP. Alker also said the short-term funding by Congress does not give the program enough sustainability.

Federal taxpayers paid nearly $16 billion for the program last year, with states adding a smaller share, according to data compiled by the nonpartisan Kaiser Family Foundation. Congress typically renews CHIP funding for five years but let it expire in September. Lawmakers have clashed recently on how to pay for the program.

Alker said if Congress doesn't approve long-term funding, "the program is going to limp along here."

The funding snafu is alarming to Liz Vitiritto of West Des Moines, whose daughter is enrolled in hawk-i. Vitiritto said she would need to quit her current job in order to find one that offers more affordable health insurance for her daughter.

"I'm hoping people in our leadership realize how much working class families need this program," she said. "It's literally necessary to a lot of people's survival."