The State Children's Health Insurance Program: Eligibility, Enrollment, and Program Funding

Publication Date: March 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

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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. SCHIP represents the largest publicly funded effort to provide health insurance to children since the enactment of Medicaid in 1965. The program offers federal matching funds for states and territories to provide health insurance coverage to uninsured, low-income children from families whose annual incomes are higher than Medicaid eligibility thresholds. States may choose from three options when designing their SCHIP programs; they may (1) expand their current Medicaid program, (2) create a new, separate state insurance program, or (3) devise a combination of both approaches. A majority of states are expanding eligibility for SCHIP to levels between 150% and 200% of the federal poverty level (FPL). In one state, New Jersey, the upper income eligibility limit for Medicaid expansions and separate state programs under SCHIP has reached 350% of the federal poverty level.

Until recently, the 106th Congress and the Clinton Administration expressed disappointment with implementation progress under SCHIP, citing low enrollment rates early in the program. By FY2000, the pace of enrollment under SCHIP had improved. The Health Care Financing Administration (HCFA) reported that nearly1 million children (982,000) were enrolled in SCHIP in FY1998 under 43 operational state programs. In FY1999, enrollment increased to nearly 2 million children (1,979,450) under 53 operational programs. On January 5, 2001, the Clinton Administration announced that enrollment in the SCHIP program reached approximately 3.3 million children by the end of FY2000. Subsequent to the enactment of BBA 97, CBO estimated that SCHIP would cover an average of 2.3 million children per year after 1999. The Clinton Administration's goal was to enroll 5 million children in SCHIP by FY2002.

In the original enacting statute, Congress provided appropriations of nearly $40 billion for the FY1998 to FY2007 period. Federal funds are allotted among the states based on a formula that takes into account the combination of the number of lowincome children and the number of low-income, uninsured children residing in a state, as well as a state cost factor. A total of $4.295 billion in federal funds was available to states and territories for FY1998 and $4.307 billion was available in FY1999. Each of FY2000 and FY2001, federal funding levels total $4.309 billion.

Like Medicaid, SCHIP is a federal-state matching program. In order to determine a state's matching payments, SCHIP uses Medicaid's concept of "federal medical assistance percentage," but modifies it to provide states an "enhanced federal medical assistance percentage" (enhanced FMAP). A state's share of total SCHIP spending is equal to 100% minus the enhanced FMAP. In FY2001, the states' regular Medicaid federal medical assistance percentages (FMAPs) range from 50% to 76.82%. Under the SCHIP program, the FY2001 enhanced FMAPs range from 65% t o 83.77% in the states. While all age groups of children have benefitted from increases in eligibility for SCHIP coverage, many of the states have taken advantage of these enhanced matching funds to extend eligibility to older adolescents.