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Summary

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. To date, the upper income eligibility limit under SCHIP has reached as high as 350% of the federal poverty level, or FPL (in one state). States may choose among three benefit options when designing their SCHIP programs. They 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, enrollment fees, deductibles, copayments, coinsurance, 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 76.00% in FY2006, the enhanced SCHIP FMAP ranged from 65% to 83.20% across states. For federal matching purposes, a 10% cap applies to state administrative expenses under SCHIP. All 50 states, the District of Columbia, and five territories have SCHIP programs in operation. As of January 2005, 17 use Medicaid expansions, 18 use separate state programs, and 21 use a combination approach. Since initial enrollment in 1997-1998, many states have amended their original SCHIP plans. Among many changes to SCHIP at the state level, approved amendments and waivers expand eligibility, define new copayment standards, and/or modify benefit packages. Approximately 5.9 million children were enrolled in SCHIP during FY2003. Roughly 4.4 million were served by separate programs and 1.5 million were enrolled in Medicaid expansions. In addition, eight states reported enrolling nearly 484,000 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. Also, at the end of FY2004, roughly $1.3 billion in unspent funds expired. However, more recent spending patterns and estimates of future funding needs suggest that some states could exhaust their available federal funds after FY2005.

Related Legislation:
• S.350

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