Highlights of Child Health Insurance (SCHIP) Provisions in the 1997 Federal Budget Bill

Beginning in 1997 and set to end in 2007, states get roughly $4 billion a year in federal grants. (During the first five years, the budget bill allocated $24 billion to child health, but nearly $4 billion of that amount went, not for the new grant program, but for increased Medicaid spending on several groups of children.) Each state has been able to choose whether to participate in the new grant program and a state may spend each year's allotment either in that year or in the two following years.

States can use the grant money to expand Medicaid, create a new state program for children's health insurance, or both. States are nearly evenly split on which of these administrative organization types they have implemented. Up to 10 percent of a state's allocation can be spent on a combination of administrative costs, outreach, direct health services for children and other health services initiatives for children. The rest must be spent on health insurance, either through Medicaid or a new state program.

Who's eligible?

As a general rule, federal grants can help only children ineligible for Medicaid with family income at or below 200 percent of the federal poverty level ($32,100 a year for a family of four in 1997). However, the bill makes an exception for states that, in June 1997, provided Medicaid to children with family incomes above 150% of poverty ($24,075 for a family of four). In such states, new child health funds can cover children with family incomes higher than 200% of poverty, up to 50 percentage points above the state's previous Medicaid eligibility level.

Benefits:

A state running a child health insurance program must provide at least the benefits covered by certain specified, commercial insurance plans (Blue Cross/Blue Shield for federal employees, a state employee health plan, or the largest HMO in the state). It can also provide a different combination of services, so long as the total value of all services is the same as under one of these benchmark plans.

Cost-sharing:

In a state child health insurance program, children with family incomes at or below 150 percent of poverty can be charged no more than the same small amounts for premiums, deductibles, co-payments and co-insurance that are permitted for adults under Medicaid. Children with family incomes over 150 percent of poverty can be charged on a sliding scale, but total payments may not exceed 5 percent of family income. For all children, well-baby care, well-child care and immunizations are exempt from any cost-sharing.

State match:

To receive federal funds, a state must pay matching amounts. The state's matching percentage is 70% of its matching rate under Medicaid. For example, a state that pays 50% of general Medicaid costs would pay only 35% of costs for new children, whether they are covered through Medicaid expansion or a new child health insurance program. Each state must pay at least 15% of such costs.

Medicaid:

To receive grants, a state must maintain the Medicaid eligibility for children that was in effect as of June 1997. A state that creates a new child health program must screen applicants for possible Medicaid coverage and enroll Medicaid-eligible children into Medicaid.

You may view the actual bill language or view a summary of SCHIP. There you can find basic eligibility and benefits information as well as links to health coverage programs in every state.

Our thanks to Families USA for the basic format of this summary.

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