In the first session of the 105th Congress, the State Children’s Health Insurance Program (CHIP) was enacted as part of the Balanced Budget Act of 1997. CHIP is a federal -state program, authorized for 10 years and funded for 5, granting states up to 48 billion dollars to provide “child health assistance” to children who are not eligible for any other insurance coverage, incluidng Medicaid. States must provide matching funds which will be matched at a rate of approximately 75%, almost half again what the Medicaid match would be. CHIP is intended to bring health insurance coverage to children of the working poor, whose families earn too much to qualify for Medicaid, but not enough to afford private, employer-sponsored coverage. The program is expected to provide coverage for an additional 3.4 million children of the estimated 10.1 million children who are currently uninsured.
The CHIP program is structured much like a block grant; states are given a significant amount of money to meet federal policy objectives (in this case insuring poor children), but make most of the program design and implementation choices themselves. States must submit plans to the Health Care Financing Administration (HCFA), which will administer CHIP, for their review and approval prior to starting the program. CHIP gives the states extensive implementation choices, including whether or not to participate at all. However, there are certain requirements that states must meet to be eligible for CHIP funding, and parameters within which programs must be designed.
This brief is designed to help policymakers through the basic decisions they will have to make regarding their state’s CHIP program. It outlines the basic decisions that must be made, the pros and cons of each option, and experiences from other states. It is not an exhaustive guide, but a tool to help policymakers think through and weigh the options presented by CHIP.