State Children's Health Insurance Program (SCHIP): A Brief Overview

Publication Date: July 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

Type:

Abstract:

The Balanced Budget Act of 1997 (BBA 97; P.L. 105-33) established the State Children's Health Insurance Program (SCHIP) under a new Title XXI of the Social Security Act. In general, this program allows states to cover targeted low-income children with no health insurance in families with income that is above Medicaid eligibility levels. As of 2004, the upper income eligibility limit under SCHIP had reached as high as 350% of the federal poverty level, or FPL (in one state).

Under SCHIP, states may enroll targeted low-income children in Medicaid, create a new separate state program, or devise a combination of both approaches. States choosing the Medicaid option must provide all mandatory benefits and all optional services covered under the state plan, and must follow the nominal Medicaid cost-sharing rules. In general, separate state programs must follow certain coverage and benefit options outlined in SCHIP law. While some cost-sharing provisions vary by family income, the total annual aggregate cost-sharing (including premiums, copayments, and other similar charges) for any family may not exceed 5% of total income in a year. Preventive services are exempt from cost-sharing.

Nearly $40 billion has been appropriated for SCHIP for FY1998 through FY2007. Annual allotments among the states are determined by a formula that is based on a combination of the number of low-income children and low-income uninsured children in the state, and includes a cost factor that represents the average health service industry wages in the state compared to the national average. Like Medicaid, SCHIP is a federal-state matching program. While the Medicaid federal medical assistance percentage (FMAP) ranged from 50% to 76% in FY2006, the enhanced SCHIP FMAP ranged from 65% to 83.2% across states.

All 50 states, the District of Columbia, and five territories have SCHIP programs in operation. As of June 2006, 17 use Medicaid expansions, 18 use separate state programs, and 21 use a combination approach. Since initial enrollment in FY1998, many states have amended their original SCHIP plans. For example, approved amendments and waivers expand eligibility, define new copayment standards, and/or modify benefit packages.

Approximately 6.2 million children were enrolled in SCHIP during FY2004. In addition, eight states reported enrolling about 646,000 adults in SCHIP through program waivers. Spending was slow in the early years of SCHIP due at least in part to lower than expected enrollment. But that trend changed in more recent years and has led some states to exhaust their federal SCHIP funds. The Deficit Reduction Act of 2005 (DRA; P.L. 109-171) provided a new appropriation of $283 million to address anticipated FY2006 shortfalls in federal SCHIP funding. The Congressional Research Service (CRS) SCHIP Projection Model projects that four states will still experience shortfalls in FY2006, totaling $2.75 million. This model projects that 18 states will experience shortfalls in FY2007. SCHIP reauthorization and financing issues are likely to be addressed by Congress in this fiscal year or in FY2007.