The State Children’s Health Insurance Program (SCHIP)
gives grants to states to provide health insurance coverage
to uninsured children up to 200% of the federal poverty level
(FPL). States may provide this coverage by expanding Medicaid
or by expanding or creating a state children’s health
insurance program. Funds are available October 1, 1997.
However, states do not have to participate, and they can also
choose to wait up to three years to implement the program
without losing any funds.(Review the text
of Title XXI)
PROGRAM STRUCTURE
Effective Date
Most provisions take effect October 1, 1997. States can start
receiving the funds then or postpone implementation for up to
3 years without losing any funds.
Eligibility
The legislation sets eligibility criteria. States can decide
to cover all of those children or to target coverage to a
narrower group of children. The eligibility criteria are to
cover uninsured children who are:
- not eligible for Medicaid
- under age 19; and
- at or below 200% of the federal poverty level (FPL).*
* If your state has expanded
Medicaid eligibility above 150% for any age group, the income
eligibility level is 50% above the current Medicaid
eligibility levels. (See chart of the eligibility levels for
various age groups in each state.)
States must maintain the Medicaid eligibility they had in
place on June 1, 1997 in order to receive the grants. They
must also maintain the same level of state spending on child
health programs that was expended in 1996.
Medicaid eligibility was reinstated, effective July 1, 1997,
for children who lost Medicaid eligibility due to SSI changes
included in last year’s welfare legislation.
Program Structure
The legislation allows states to choose the way they spend
their money. They can:
- expand Medicaid;
- create or expand a state program; or
- a combination of both
States can also spend up to 10% of the funds to provide
coverage through a community-based health delivery system or
by purchasing family coverage.
For assistance with deciding which approach would be best
in your state, see Medicaid Expansion
or State Program: Issues to Consider and Comparison of Major State Options.
Waiver Provision
While the law limits the amount (10%) that states can spend
on direct purchase of services, administration, and outreach
the Secretary of Health and Human Services can grant states
waivers to spend more on these.
BENEFITS PACKAGE
If a state chooses to implement a Medicaid expansion,
states must offer the newly eligible the same Medicaid
benefits package.
If a state chooses to implement a state children’s
health insurance program, it can choose the benefits package
from among five basic options.
- Blue Cross/Blue Shield preferred provider option
offered to federal employee offered under the FEHBP.
- State employee health plan (To obtain a copy, contact
the office in your state that administers insurance
for state employees. This might be located within the
Department of Administration, Personnel, Civil
Service, or Human Relations.) Click
here for Your State’s Home Page.
- HMO with the largest insured commercial, non-Medicaid
enrollment in the state (To obtain a copy, contact
the office of your state’s Insurance
Commissioner.)
- Click
here for Your State’s Home Page.
- Coverage that is the actuarial equivalent to one of
the above (1 through 3).
- Another benefit package approved by the Secretary of
Health and Human Services.
Because of their existing state programs, New York,
Pennsylvania and Florida have been exempted from the above
benefits requirements and can continue to offer the health
insurance package in place in their children’s health
insurance programs at the time of enactment.
COST SHARING FOR FAMILIES
States are allowed to impose premiums, deductibles, or
fees for some services and for some groups. However, no
copayments are allowed for pediatric preventive care,
including immunizations, at any income level.
At or below 150% FPL, current regulations on cost sharing
for adults receiving Medicaid apply. States can impose the
following:
- premiums: $15-19 per family per month
- deductibles: $2 per family per month
- co-insurance: 5% of non-institutional costs
- co-payments: range from $.50 to $3.00 per service
- institutional care: 50% of the first day’s
costs.
For children above 150%, states can impose premiums,
deductibles or other cost-sharing on a sliding scale not to
exceed 5% of the family’s income.
FUNDING
The agreement authorizes $40 billion over 10 years ($20
billion in the first 5 years) for SCHIP*. The
minimum allocation to a state is $2 million in any year. See
the Estimated State Allocation for
your state.
* The legislation also includes
an additional $8 billion over 10 years ($4 billion in the
first 5 years) to cover several Medicaid provisions (e.g.
presumptive eligibility, continuous eligibility, restoration
of Medicaid to those who lost SSI due to the welfare
legislation)
STATE MATCHING REQUIREMENTS
State Matching Rate
States are required to provide matching funds in order to
receive their state allocations.
The federal government will match states funds at 30%
higher than the state’s FMAP (Federal Medical Assistance
Percentage), which determines the portion of Medicaid
expenses the federal government contributes. However, the
maximum federal match is 85%.
For example: if a state’s FMAP is 50% (the federal
government contributes 50%, and the state must pay 50% of its
Medicaid expenses) the federal government will match funds
under the SCHIP program at 65% [.30 x 50%= 15% and 50% + 15%
= 65%].
State Matching Rate and the Medicaid Expansion Option
If a state chooses to expand Medicaid with the SCHIP
funds, the state allocation is paid out through an
"enhanced" FMAP. The maximum enhanced FMAP is 85%.
The calculation is the same as in the previous example.
For example, if a state FMAP is 50%, the federal government
will pay 65% of the Medicaid expenses for children covered by
this new program.
The state will receive the enhanced FMAP until the
state’s SCHIP funds run out.* If there are still
Medicaid expenses, the state match reverts to the regular
FMAP. Because of a fear of using up the SCHIP funds, states
may choose to be conservative when expanding Medicaid
eligibility. For example, a state may choose to expand
Medicaid eligibility to 185% FPL, instead of the maximum
200%.
*If your state chooses the
Medicaid expansion option and also adopts the Medicaid
presumptive eligibility option, children are covered at the
enhanced FMAP until their Medicaid eligibility is determined.
If they are found to be Medicaid eligible according to the
eligibility criteria in place on June 1, 1997, future
services are matched at the regular FMAP. If they are found
to be Medicaid eligible according to the expanded Medicaid
eligibility criteria, future services are matched at the
enhanced FMAP.
Restrictions on Financing State Match
The law places several restrictions on how states finance
their matching requirements. States cannot use:
- any federal funds
- provider taxes
- cost sharing with enrollees
In addition, states cannot use SCHIP funds to meet their
federal matching requirements for the Medicaid program.
STATE MAINTENANCE OF EFFORT
In order to receive the SCHIP funds, states can not lower
their Medicaid eligibility levels from what was in force on
June 1, 1997. States must also maintain the same level of
state spending on child health programs that they expended in
1996.
ADMINISTRATION
Federal Administration
The Center for Medicaid and State Operations in the Health
Care Financing Administration will administer the program.
State Plan
States must submit a plan to the Secretary of Health and
Human Services in order to receive funds. The plan must
include: the number of uninsured children, what the state is
already doing, eligibility requirements (can target on the
basis of geography, income, age, residency, etc.), benefits
package offered, how it will be coordinated with Medicaid,
and outreach to be conducted. States can submit amendments to
their plans at any time. There are no explicit requirements
that states use a public process in developing their plan.
However, if the state submits an amendment to restrict
eligibility or benefits, the state must ensure that it has
allowed prior public notice of the change.
Cap on Administration
States cannot spend more than 10% of the funds on
administration, including outreach and enrollment, and direct
purchase of services. The Secretary may grant waivers to
states seeking to spend more on these.
Data Collection and Reporting
By March 31, 2000 each state must submit an evaluation of the
state’s plan in increasing the number of children with
health insurance.
For further information, please e-mail us at staccess@aap.org, or
call us at 847/434-7799. Due to the complex nature of
legislative issues, we request that you include your name,
e-mail address, mailing address, phone number, and/or fax
number in your e-mail correspondence, so that we may contact
you for more information if necessary.
