SCHIP

How It Works

The State Children’s Health Insurance Program (SCHIP) is a joint Federal/State program. The Federal government provides States with block grants to provide health insurance coverage to uninsured children up to 200% of the Federal Poverty Level (FPL). Federal legislation sets eligibility criteria, which include:

children not covered by Medicaid,
under age 19 and
at or below 200% of the FPL

States can decide to cover all or a subgroup of these children.

States can provide coverage by expanding Medicaid or by expanding or creating a State children’s health insurance program. However, States must maintain the Medicaid eligibility criteria they had in place on June 1, 1997 and maintain the same level of spending on child health programs as was expended in 1996.

In order to receive Federal funding, States must submit a plan to the Secretary of Health and Human services. States are required to provide matching funds. The federal government will match State funds at 30% higher than the State’s Federal Medical Assistance Percentage (FMAP). The maximum Federal match is 85%. The minimum allocation to a State is $2 million in any year. SCHIP is not mandatory, however, all 50 States, D.C. and 5 territories have approved plans.

If a State chooses to expand Medicaid, the State must offer the new eligibility group the same Medicaid benefits package. If a State chooses to implement a State children’s health insurance program, there are 5 basic options for developing benefits packages:

Blue Cross/Blue Shield preferred option offered to federal employee offered under the FEHBP
State employee health plan
HMO with the largest insured commercial, non-Medicaid enrollment in the State
Coverage that is the actuarial equivalent to one of the above
Another benefit package approved by the Secretary of Health and Human Services

New York, Pennsylvania and Florida were exempted from these requirements because of their existing State programs.

SCHIP does allow States to impose premiums, deductibles or fees for some services or groups. However, no copayments are allowed for pediatric preventive care. At or below 150% of the FPL States can impose the following:

Premiums: $15-19 per family per month
Deductible:$2 per family per month
Co-insurance: 5% of non-institutional costs
Co-payments: ranging form $0.50 to $3.00 per servies
Institutional care: 50% of the first day’s costs

For children above 150% of the FPL, states can impose cost-sharing on a sliding scale not to exceed 5% of the family’s income.

SCHIP currently provides health insurance for more than 4 million low-income children.

History

SCHIP, or Title XXI of the Social Security Act was authorized under the Balanced Budget Act of 1997. $40 billion was authorized over a 10 year period (1998-2007).

Policy Update

SCHIP funding was due for re-authorization in 2007. At its inception, SCHIP was established as a mandatory program with an annual funding cap and no automatic adjustment mechanism. Therefore, as health care costs have risen, SCHIP funding levels have remained the same. When President Bush released his FY2008 budget, he included an increase in SCHIP funding by $5 billion over the next five years. However, the Congressional Research Service estimated SCHIP would need three times that amount to just maintain coverage for current program enrollees. HHS Secretary Mike Leavitt estimated the budget proposal would reduce the number of SCHIP enrollees by 400,000 between 2008 and 2012.

Congress passed legislation increasing funding for SCHIP by $35 billion over the next five years with the goal of increasing the number of children covered from 6.6 million to 10 million. They proposed to pay for the increase with a cigarette tax. President Bush vetoed the bill for the second time on December 12, 2007. Unable to come to a compromise on long term reauthorization of SCHIP, Congress passed an extension of the program through March, 2009, which the President did sign. Democratic and Republican lawmakers state they will continue to work towards long term reauthorization in 2008. (Last update 1/16/08)

Links

Centers for Medicare and Medicaid Services

American Academy of Pediatrics

Covering Kids and Families (a Robert Wood Johnson project)

References

American Academy of Pediatrics. State Insurance Program (SCHIP). August 5, 1997. Available at: http://www.aap.org/advocacy/schipsum.htm. Accessed January 23, 2007.

Center on Budget and Policy Priorities. Freezing SCHIP Funding in Coming Year Would Reverse Recent Gains in Children’s Health Coverage. November 28, 2006. Available at: http://www.cbpp.org/6-5-06health.htm. Accessed January 23, 2007.