HELENA -- Montana has one of the nation's highest percentages of kids without health insurance -- and most of those kids are in homes where parents have a job, according to a report released Thursday.

The report by Families USA, a health-care advocacy group based in Washington, D.C., said about 37,000 Montana children have no health insurance. That's 16 percent of the children in the state.

It also said 92 percent of these children are in families where at least one parent works.

Rep. Mary Caferro, D-Helena, said the report is a strong argument for expanding the government-funded Children's Health Insurance Program (CHIP), which offers health coverage to kids in families earning up to 150 percent of the federal poverty level.

"We just have to accept that we can't count on employer-based health insurance to cover children," she said.

CHIP, funded by the state and federal government, currently covers about 13,200 kids in Montana.

Caferro and other advocates for low-income Montanans say CHIP eligibility should be expanded to cover kids in families earning up to 200 percent of the federal poverty level, or $33,200 for a family of three.

"It's a perfect policy decision and we're in a perfect position to do it," she said, noting that the state has a projected budget surplus next year of more than $500 million. "So let's do it."

Gov. Brian Schweitzer's administration hasn't taken a formal position yet on expanding CHIP eligibility. But the governor's budget director, David Ewer, said Thursday he's against it.

The federal government provides a set amount of money for CHIP, and at current spending levels, the federal share will start running out in late 2008, he said.

If Congress doesn't increase the federal share between now and 2008, the state eventually might have to pick up the entire tab for some CHIP funding, Ewer said. The state pays one-fifth of the cost now.

"Even at the current level, I'm worried about the sustainability of the CHIP program," Ewer said.

Caferro argued that investing in CHIP is a good investment for the state and its children, because the Families USA report also showed that children without health insurance are much less likely to get the medical care they need.

The report said about half the kids without insurance did not have a "well child" health check within the last year and that 10 percent didn't see a dentist once in the previous year.

Caferro also said if CHIP is expanded to cover kids in families with income up to 200 percent of the poverty level, as many as three-fourths of the uninsured kids in Montana would get coverage.

"We're lucky in Montana because we have money to do something about it," she said. "This report is very timely, because people are thinking about what they want to accomplish at the (2007) Legislature."

The Families USA report relied on U.S. Census data from 2003-2005, averaging the figures from each year. It said the data for smaller states like Montana and its neighbors should be "read with caution," because the populations samples used are fairly small.

Only four states had a higher percentage than Montana of children without health insurance: Nevada, New Mexico, Florida and Texas.

Montana's neighboring states also had much lower percentages of their children without insurance, according to the report. Idaho had 11.7 percent; Wyoming 11.6 percent; North Dakota 9.2 percent and South Dakota 8.8 percent.