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Journal Issue: Children and Managed Health Care Volume 8 Number 2 Spring 1998

REVISITING THE ISSUES: The State Children's Health Insurance Program (CHIP)
Eugene M. Lewit


Between 7 million and 10 million children in the United States lack health insurance. Many of these uninsured children experience difficulty obtaining needed health care.1 To expand health insurance coverage for children, in August 1997, Congress enacted the State Children's Health Insurance Program (CHIP) as part of the Balanced Budget Act of 1997.2 CHIP, also known as Title XXI of the Social Security Act, offers states new federal funding in the form of block grants to provide "child health assistance to uninsured children in low-income families in an effective and efficient manner that is coordinated with other sources of health benefits coverage for children." The program is authorized for 10 years and is expected to provide insurance coverage for millions of currently uninsured children. Federal expenditures on child health assistance under the law are estimated to total $40 billion to $50 billion over the life of the legislation.

The enactment of CHIP represents the most significant funding increase for children's health insurance coverage since the enactment of Medicaid in 1965. Medicaid, a means-tested entitlement program financed by the state and federal governments and administered by the states, covered approximately 17.5 million children in 1995. Medicaid covers approximately two-thirds of all poor children and one-quarter of the children in families with incomes between 100% and 200% of the federal poverty level. Despite expansion of the Medicaid program in recent years, many children in low-income families remain uninsured.3 CHIP is intended to address this problem.

Although participating states must provide some funding, and states must meet a number of requirements to be eligible for federal CHIP funding, CHIP legislation gives states considerable flexibility in implementing the program. This short article reviews the basic decisions that states must make when implementing their CHIP programs and reports on the decisions that states participating in the program have made, as reflected in the plans they had submitted to the Health Care Financing Administration (HCFA) as of April 1, 1998.4 Because the implementation of CHIP is very much a work in progress, a guide to frequently updated, primarily electronic, sources of information about the CHIP program and other efforts to expand coverage for children and their families is also provided in Box 1.