• Mission & Governance
• Services Overview
• How to Get Involved
• Standing Committees
• NCSL Foundation

• Issue Areas: A-Z
• State-Federal Relations
• NCSL Standing Committees
• News from D.C. and the States

• About State Legislatures
• Elections, Campaigns & Redistricting
• NCSL's StateConnect Directory
• Web Sites

• Online Guide to NCSL Services
• Staff Sections and Networks
• Meetings & Professional Development
• Staff Directories

• Meetings Calendar
• Online Registration
• Meetings Home Page
• Legislative Summit

• Bookstore
• State Legislatures Magazine
• NCSL's StateConnect Directory

State Children’s Health Insurance Program Efforts Gain Momentum

State Budget & Tax News

Volume 19, No. 23: December 1, 2000

Reprinted with permission from State Budget & Tax News

In its third year, the State Children’s Health Insurance Program (SCHIP) is emerging as an important component of the drive to provide health care for low-income children. The program was established as part of the Balanced Budget Act of 1997 to expand health insurance coverage for children in families ineligible for Medicaid, but unable to afford private insurance. Though the federal government began making funds available in fiscal year (FY) 1998, few states had programs in place so much of the money has gone unspent. They only spent 3 percent in FY 1998 and 21 percent in FY 1999 of available federal money. By FY 2000, all states had programs approved by the Health Care Financing Administration (HCFA). States were expected to spend 49 percent of federal allotments in FY 2000.

Enrollment has accelerated with the establishment of more state programs. Outreach efforts also have intensified. Health Care Financing Administration reports that almost 2 million children received coverage through SCHIP in FY 1999, more than double the previous year. Preliminary data from 43 states indicate that enrollment was up more than 80 percent in FY 2000. Ten states reported doubling their enrollment, and another nine states reported tripling their enrollment. In addition, outreach efforts targeting kids for SCHIP also have identified many children who are eligible for Medicaid. Some of the recent acceleration of state Medicaid spending has been attributed to increased enrollment due to these outreach programs.

The legislation that authorized SCHIP allocated about $48 billion in grants to states over the first 10 years. States are required to contribute about 70 percent of their Medicaid matching rate to be eligible for federal SCHIP funds. Medicaid matching rates are set between 50 percent and 83 percent. (These rates refer to the percentage of total costs paid by the federal government. For example, if a state’s matching rate is 75 percent, the state pays 25 percent and the federal government pays 75 percent.) Wealthy states are required to contribute more than poor states. In 2000, the Medicaid rates varied from 50 percent in 10 states to 76.80 percent in Mississippi. They averaged 57 percent overall. In other words, 10 states paid 50 percent of Medicaid costs, while Mississippi paid 23.2 percent. On average, states paid 43 percent. The state share of SCHIP costs averages about 30 percent, with Mississippi paying 16.33 percent.

SCHIP’s authorizing legislation allowed states to extend coverage by establishing separate programs, expanding Medicaid coverage or a combination of both. This allowed states with existing children’s health programs easy access to SCHIP funding. States that did not want to create an additional bureaucracy could expand access through Medicaid. The legislation also allowed states the flexibility to set eligibility limits. In a number of states, the upper eligibility limit reached 300 percent of the federal poverty level. New Jersey had the highest limit at 350 percent. Most states pay for SCHIP from general funds, though tobacco settlement funds are also an important funding source.

The following table provides basic information on state programs. The upper eligibility limit may not apply to all children. In general, Medicaid programs provide more coverage for younger children, and SCHIP programs fill the gap. For example, New Jersey’s SCHIP program provides coverage through expanded Medicaid and a separate state insurance plan. Children in families with incomes less than 133 percent of the federal poverty level are insured through Medicaid and those in families with incomes more than 133 percent and less than 350 percent are covered by the state plan.

As Programs Go Online, Spending Accelerates

The federal government made $4.2 billion available for SCHIP in FY 1998, but states only spent $121.2 million, about 3 percent. States have three years to spend funds before they are sent back to HCFA. For example, states had until the end of FY 2000 to use their FY 1998 allotment. Most states programs still do not have sufficient enrollment to spend all of their current funds, let alone accumulations from past years. Only 10 states are expected to use all of their FY 1998 allotment by the end of FY 2000. HCFA has not decided what will be done with unspent money, although a number of proposals to redistribute it back to the states have been presented.

States with existing programs were able to use federal allotments more quickly than states that had to set up programs from scratch. New York, which had established the Child Health Plus Program in 1991, spent 20 percent of its allotment in FY 1998, 94 percent in FY 1999 and is expected to spend 156 percent in FY 2000 (by using unspent allotments from previous years.) Alaska, Kentucky and Massachusetts join New York as the only states where total expenditures are expected to exceed FY 2000 allotments.

The following table lists projected state expenditures and allotments for FY 2000. The final column compares expenditures from SCHIP’s first three years with the FY 1998 allotment. All but 10 states are expected to return some of their FY 1998 allotment to HCFA. Minnesota is expected to spend almost none of its SCHIP allotment because the state’s Medicaid program already covered children in families with incomes up to 275 percent of the federal poverty level. Its SCHIP program only extends coverage to children less than 2 years old in families with incomes up to 280 percent of the federal poverty level.

Posted December 2000, reviewed December 2003.
Email statebudget-info@ncsl.org for more information.
Visitor counts for this page.