On July 25, the Senate Finance Subcommittee on Health held a hearing to review the effects of the Children’s Health Insurance Program (CHIP) over the past 10 years. CHIP, enacted in 1997 as part of the Balanced Budget Act (P.L. 105-33), is designed to provide health insurance to Medicaid-ineligible children residing in families with incomes below 200 percent of the federal poverty line or in families with incomes up to 50 percent higher than their state’s Medicaid eligibility level.
Dr. Mark McClellan, administrator of the Centers for Medicare and Medicaid Services (CMS), discussed state-specific criteria for eligibility in the CHIP program; the program’s federal-state cost-sharing model; the ability of the secretary of the Department of Health and Human Services to waive certain program requirements, which allow states greater flexibility to expand eligible populations; and the federal funding of CHIP. Dr. McClellan said, “Enrollment of children in SCHIP [state children’s health insurance] programs has increased from 660,000 in FY1998 to 6.1 million ever-enrolled for FY2005. When the program began, CMS had estimated enrollment of only 5 million by FY2005. CMS wants to build on the successful enrollment in SCHIP and is committed to finding and enrolling as many eligible children as possible. The President’s proposed ‘Cover the Kids’ initiative would provide $100 million annually for grants to the states, tribes, schools, and faith-based and community organizations to increase enrollment of children in SCHIP and Medicaid.”
Dr. McClellan continued, saying, “The program provides each state with the flexibility to design its program within broad federal guidelines in order to best meet the unique needs of the children and families it serves…This flexibility has helped make SCHIP a clear success, because SCHIP took an innovative approach: flexibility for states to find the best way to provide coverage within broad federal guidelines. SCHIP gives states the ability to adjust the program’s coverage to reflect the particular needs and economic circumstances of the populations served, and to use new and creative approaches to provide health insurance coverage effectively.” He gave the example of Minnesota, a state that has used the flexibility provided in CHIP to “provide coverage to those with incomes from 100 to 200 percent of FPL [federal poverty level] who are parents and relative caretakers of Medicaid- and SCHIP-eligible children.”
Sen. Ted Kennedy (D-MA) thanked his colleagues for the opportunity to testify about the history of CHIP. Sen. Kennedy told the subcommittee that Massachusetts was the first state to enact legislation to cover children in low-income families who were ineligible for Medicaid. He said, “Other states took similar action, to create a nationwide call for action to address the health needs of children. Congress acted on that call, and the result was CHIP, a program that can make the difference between a child starting life burdened with disease — or a child who is healthy and ready to learn and grow. In every state in the nation and in Puerto Rico, CHIP covers the services that give children the right start in life — well child care, vaccinations, doctor visits, emergency services, and many others.”
Sen. Kennedy urged additional funding for CHIP, saying, “Congress needs to renew its commitment to CHIP. The President’s budget assumes that CHIP funding will remain at about $5 billion per year. But with rising health costs, we will need an additional investment of $12 billion over the five years between 2008 and 2012 just to break even. If we fail to provide that funding, the consequences will be disastrous.” He also told the subcommittee that outreach efforts need to be expanded: “Millions of children eligible for CHIP or Medicaid are not enrolled. Of the over eight million uninsured children, three quarters — or over 6 million — already are eligible for Medicaid or CHIP. These programs are there to help them, but these children are not getting that help, because their parents are unaware of their eligibility or because there are barriers to enrollment. We should look at innovative ways of working with our schools, our churches, and state and local governments to make sure that parents know that this health insurance is available for their children. By improving outreach — and providing the funding needed to make that outreach a success — we can see that CHIP continues its remarkable success in reducing the percentage of children who are uninsured.”
Evelyne Baumrucker, an analyst with the Congressional Research Service said, “As the Congress turns its focus to SCHIP in anticipation of the program’s reauthorization in FY2007, discussions surrounding the SCHIP funding formula and redistribution issues will likely dominate. Limited federal funding may require priority setting by federal and state governments. Based on public forum discussions among SCHIP directors and other SCHIP stake holders, there is interest in examining and possibly redefining the SCHIP core populations to prioritize among eligible groups. Congress may be asked to consider extending program coverage to new groups such as children of state employees, legal immigrant children, pregnant women, parents and/or other adults. Any such expansions would be limited by available funds. Similarly, other options such as changes to benefit packages allowing states to use SCHIP funds to provide wrap-around coverage for under-insured groups would be limited by fiscal constraints.”
Also testifying was Chris L. Peterson, a specialist from the Congressional Research Service, on possible budgetary shortfalls and state funding formulas.