Fiscal Year 2010 Budget in Brief

Children’s Health Insurance Program

(dollars in millions)

The Balanced Budget Act of 1997 (BBA) (P.L. 105-33) created the Children's Health Insurance Program (CHIP) under Title XXI of the Social Security Act. The BBA appropriated almost $40 billion in mandatory funding to the program over 10 years (FY 1998 through FY 2007). The program was extended by the Medicare, Medicaid, and SCHIP Extension Act of 2007 (P.L. 110 173) through March 2009.

The Children’s Health Insurance Program Reauthorization Act of 2009 (P.L. 111-3) reauthorized the CHIP program through FY 2013, providing an additional $44 billion in funding over five years and creating several new initiatives to increase innovation and enrollment in the program.

HOW CHIP WORKS

CHIP is a partnership between Federal and State Governments that helps provide low-income children with the health insurance coverage they need. The program improves access to health care and quality of life for millions of vulnerable children 19 years of age and under. In general, CHIP reaches children whose families have incomes too high to qualify for Medicaid, but too low to afford private health insurance.

States with an approved CHIP plan are eligible to receive an enhanced Federal matching rate, which ranges from 65 to 85 percent, drawn from a capped allotment.

States have a high degree of flexibility in designing their programs. They can implement CHIP by:

• Expanding Medicaid;
• Creating a new, non-Medicaid Title XXI separate State program; or
• A combination of both approaches.

IMPLEMENTATION AND ENROLLMENT

Since September 1999, every State, the District of Columbia, and all five Territories have had approved CHIP plans. As of April 2009, States and Territories have received approval for 12 Medicaid expansion programs, 18 separate programs, 26 combination programs, and 328 State plan amendments.

In FY 2008, total CHIP enrollment at some point during the year was 7.9 million. This represents an increase of approximately 200,000, or 2.3 percent, over FY 2007 enrollment.

RECENT PROGRAM DEVELOPMENTS

Children’s Health Insurance Program Reauthorization Act of 2009 (P.L. 111-3)

The reauthorization of CHIP provides an additional $44 billion to increase CHIP coverage from 7.9 million in FY 2008 to over 12 million children in FY 2013. It expands CHIP and provides tools and incentives for States to strengthen and expand their CHIP programs.

Increased CHIP Allotments to States: Provides an additional $44 billion in State allotments for CHIP programs over five years. The reauthorization also shortened the period of availability of CHIP allotments from three years to two years.

Child Enrollment Contingency Fund: Establishes a contingency fund to alleviate future State funding shortfalls through payments based on efforts to increase enrollment in Medicaid and CHIP.

Performance Bonus Payments: Provides funding for performance bonus payments to States that increase enrollment levels above specified targets to offset the additional costs of increased enrollment.

Optional Coverage of Low-income Pregnant Women under a State Plan Amendment: Allows States to cover low-income pregnant women under a State Plan Amendment rather than under waiver authority.

Coverage of Non pregnant Childless Adults and Parents: Eliminates new waivers to cover non-pregnant childless adults and phases out existing waiver programs by December 31, 2009, but allows States to transition these populations through Medicaid waivers. Existing waivers that cover parents may continue through FY 2011 with some options to continue through FY 2013, subject to certain statutory conditions and funding limitations.

Promoting Outreach and Enrollment: Provides funding for competitive grants and for a national enrollment campaign to improve enrollment of eligible children in Medicaid and CHIP. Sets aside funds for improving enrollment of Indian children.

Express Lane Eligibility Determination: Allows States to rely on findings from an Express Lane Agency to determine eligibility for Medicaid and CHIP.

Alternative Process for Citizenship Documentation: Creates an alternative process for verifying citizenship and nationality that aims to lessen the administrative burden on States.

Coverage of Legal Immigrant Pregnant Women and Children: Creates a State option to provide coverage under Medicaid and CHIP for otherwise eligible pregnant women and children who are lawfully residing in the United States, without application of a five-year waiting period.

Additional Option to Provide Premium Assistance: Creates a State option to provide premium assistance subsidies for qualified employer-sponsored insurance to all Medicaid and/or CHIP eligible children and parents.

Children’s Health Quality Initiative: Establishes several activities that aim to improve measurement of pediatric health quality and child health quality outcomes.

Dental Benefits: Requires that all State CHIP plans provide dental coverage to all beneficiaries. Mental Health Parity in CHIP: Requires parity of benefits and cost sharing for mental health and substance abuse treatment and medical and surgical services.

Medicaid and CHIP Payment and Access Commission (MACPAC): Creates a commission similar to MedPAC for improving access to care and delivery in the Medicaid and CHIP programs.

Medicare, Medicaid, and SCHIP Extension Act of 2007 (P.L. 110 173) FY 2009 Shortfall Funding:
The Act provided $275 million in funding for States who experienced funding shortfalls in FY 2009.

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