State Children's Health Insurance Program

State Children's Health Insurance Program

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The State Children's Health Insurance Program (SCHIP) – later known more simply as the Children's Health Insurance Program (CHIP) – is a program administered by the United States Department of Health and Human Services
United States Department of Health and Human Services
The United States Department of Health and Human Services is a Cabinet department of the United States government with the goal of protecting the health of all Americans and providing essential human services. Its motto is "Improving the health, safety, and well-being of America"...

 that provides matching funds
Matching funds
Matching funds, a term used to describe the requirement or condition that a generally minimal amount of money or services-in-kind originate from the beneficiaries of financial amounts, usually for a purpose of charitable or public good.-Charitable causes:...

 to states for health insurance
Health insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...

 to families with children. The program was designed to cover uninsured children in families with incomes that are modest but too high to qualify for Medicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...


At its creation in 1997, SCHIP was the largest expansion of taxpayer-funded health insurance coverage for children in the U.S. since Medicaid began in the 1960s. The statutory authority for SCHIP is under title XXI of the Social Security Act. It was sponsored by Senator Edward Kennedy
Edward Kennedy
Edward Kennedy may refer to:*Ted Kennedy, Edward Moore "Ted" Kennedy , United States Senator from Massachusetts*Edward Kennedy , journalist who first reported the German surrender in World War II*Edward Kennedy, Jr., son of U.S...

 in a partnership with Senator Orrin Hatch
Orrin Hatch
Orrin Grant Hatch is the senior United States Senator for Utah and is a member of the Republican Party. Hatch served as the chairman or ranking member of the Senate Judiciary Committee from 1993 to 2005...

 with support coming from First Lady Hillary Rodham Clinton
Hillary Rodham Clinton
Hillary Diane Rodham Clinton is the 67th United States Secretary of State, serving in the administration of President Barack Obama. She was a United States Senator for New York from 2001 to 2009. As the wife of the 42nd President of the United States, Bill Clinton, she was the First Lady of the...

 during the Clinton administration.

States are given flexibility in designing their SCHIP eligibility requirements and policies within broad federal guidelines. Some states have received authority through waivers of statutory provisions to use SCHIP funds to cover the parents of children receiving benefits from both SCHIP and Medicaid, pregnant women, and other adults. SCHIP covered 6.6 million children and 670,000 adults at some point during federal fiscal year 2006, and every state, except Arizona has an approved plan. Despite SCHIP, the number of uninsured children continued to rise, particularly among families that cannot qualify for SCHIP. An October 2007 study by the Vimo Research Group found that 68.7 percent of newly uninsured children were in families whose incomes were 200 percent of the federal poverty level
Poverty in the United States
Poverty is defined as the state of one who lacks a usual or socially acceptable amount of money or material possessions. According to the U.S. Census Bureau data released Tuesday September 13th, 2011, the nation's poverty rate rose to 15.1% in 2010, up from 14.3% in 2009 and to its highest level...

 or higher. In FY 2008, the program faced funding shortfalls in several states.

During the administration of George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....

, two attempts to expand funding for the program failed when President Bush vetoed them. Mr. Bush argued that such efforts were steps toward federalization of health care, and would "steer the program away from its core purpose of providing insurance for poor children and toward covering children from middle-class families." On February 4, 2009, President Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

 signed the Children's Health Insurance Reauthorization Act of 2009, expanding the healthcare program to an additional 4 million children and pregnant women, including for the first time legal immigrants without a waiting period.


As a part of the fallout from the failed 1993 Clinton health care plan, both Democratic Senator Ted Kennedy and the Clinton administration were looking for smaller initiatives for publicly-funded health care that could gain bipartisan support.

Kennedy was intrigued by a children's health insurance plan in Massachusetts
The Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...

 that had passed in 1996, and met with a Boston Medical Center
Boston Medical Center
Boston Medical Center is a non-profit 639 licensed-bed medical center in Boston, Massachusetts. It was created by the formal merger of Boston City Hospital which was the first municipal hospital in the United States and Boston University Medical Center Hospital in July 1996 which was sponsored...

 pediatrics director and a Massachusetts state legislator to discuss the feasibility of a national initiative. Kennedy also saw using an increase in tobacco taxes
Sin tax
A sin tax is a kind of sumptuary tax: a tax specifically levied on certain generally socially proscribed goods and services. These goods are usually alcohol and tobacco, but also include candies, soft drinks, fat foods and coffee, while services range from prostitution to...

 as a way to pay for the expanded coverage. Thus, in October 1996, Kennedy introduced a bill to provide health care coverage for children of the working poor, to be financed via a 75 cents a pack cigarette tax increase.

Meanwhile, in December 1996 First Lady Hillary Rodham Clinton examined several possible such initiatives and decided expanding health care insurance to children who had none was the one to advance, especially as its focus on children would be politically popular. Indeed, a different variant of this approach, dubbed "Kids First", had been envisioned as a backup plan during the original 1993 Task Force on National Health Care Reform meetings. Additionally, Hillary Clinton had discussed an SCHIP-ish program with a White House health policy coordinator during the time her full-blown health care plan had suffered political failure.

The new initiative was proposed at Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...

's January 1997 State of the Union address
State of the Union Address
The State of the Union is an annual address presented by the President of the United States to the United States Congress. The address not only reports on the condition of the nation but also allows the president to outline his legislative agenda and his national priorities.The practice arises...

, with the stated goal of coverage up to five million children. Kennedy continued to write much of the bill, using the increase in tobacco taxes to pay the $20 billion price tag. In March 1997, Kennedy brought Republican Senator Orrin Hatch onto the legislation as co-sponsor; Kennedy and Hatch had worked together as an "odd couple" in the Senate before, and here Hatch said that "Children are being terribly hurt and perhaps scarred for the rest of their lives" and that "as a nation, as a society, we have a moral responsibility" to provide coverage. Hatch's role would infuriate some Republican colleagues and conservative commentators
American conservatism
Conservatism in the United States has played an important role in American politics since the 1950s. Historian Gregory Schneider identifies several constants in American conservatism: respect for tradition, support of republicanism, preservation of "the rule of law and the Christian religion", and...

. The First Lady did not hold news conferences or testify before Congress on behalf of the bill.

An initial objection of Republicans in the Senate was that proposing to pay for the services by raising the federal tax on cigarettes, from 24 cents a pack to 67 cents a pack, ignored the likely consequence that sale of tobacco products would decrease and tax revenues would increasingly fall short of those needed to pay for the expansion of benefits. Kennedy and Hatch scoffed at the objection, with the former saying, "If we can keep people healthy and stop them from dying, I think most Americans would say 'Amen; isn't that a great result?' If fewer people smoke, states will save far more in lower health costs than they will lose in revenues from the cigarette tax." Republicans also criticized the bill as an open-ended entitlement program, although it was structured as a block grant
Block grant
In a fiscal federal form of government, a block grant is a large sum of money granted by the national government to a regional government with only general provisions as to the way it is to be spent...

 rather than an entitlement; Senate Majority Leader Trent Lott
Trent Lott
Chester Trent Lott, Sr. , is a former United States Senator from Mississippi and has served in numerous leadership positions in the House of Representatives and the Senate....

 was an early opponent of the measure, calling it a "big-government program" that would not pass.

Then the bill had to comply with the existing balanced budget agreement between Congress and the White House, something that Lott said it did not. Pressure was on to reduce the amount of grants involved, with $16 billion a possible compromise; Hillary Clinton instead argued for $24 billion. The Clinton administration had a deal with the Republican leadership in Congress that forbade the administration from backing any amendments to the budget resolution. Thus, Bill Clinton phoned members of Congress and asked that they kill the children's health insurance provision when it came to the floor. On May 22, it was so done, with the necessary cigarette tax amendment defeated by a 55–45 margin. Hillary Clinton defended her husband's action at the time, saying "He had to safeguard the overall budget proposal," but Kennedy was surprised and angered by it, considering it a betrayal, and saying that his calls to Bill Clinton and Vice President Al Gore
Al Gore
Albert Arnold "Al" Gore, Jr. served as the 45th Vice President of the United States , under President Bill Clinton. He was the Democratic Party's nominee for President in the 2000 U.S. presidential election....

 had not been returned. Hatch was also upset, saying that Lott may have been bluffing and that, "I think the President and the people in the White House caved here."

Kennedy did not give up on the measure, saying: "We shall offer it again and again until we prevail. It's more important to protect children than to protect the tobacco industry." Both Bill and Hillary Clinton argued for including the children's health insurance in subsequent legislation. The bill was indeed revived by Kennedy and Hatch a month after its initial defeat. Organizations from the Children's Defense Fund
Children's Defense Fund
The Children's Defense Fund is an American child advocacy and research group, founded in 1973 by Marian Wright Edelman. Its motto Leave No Child Behind reflects its mission to advocate on behalf of children...

 to the Girl Scouts of the USA
Girl Scouts of the USA
The Girl Scouts of the United States of America is a youth organization for girls in the United States and American girls living abroad. It describes itself as "the world's preeminent organization dedicated solely to girls". It was founded by Juliette Gordon Low in 1912 and was organized after Low...

 lobbied for its passage, putting public pressure on Congress; Hillary Clinton was pushing for it as well, with Kennedy urging her to use her influence within the White House. SCHIP was then passed and signed into law by Bill Clinton on August 5, 1997 as part of the Balanced Budget Act of 1997
Balanced Budget Act of 1997
The Balanced Budget Act of 1997, , was signed into law on August 5, 1997. It was an omnibus legislative package enacted using the budget reconciliation process and designed to balance the federal budget by 2002....

, to take effect the following month. At a press conference following the signing, Kennedy thanked Hatch, Senate Minority Leader Tom Daschle
Tom Daschle
Thomas Andrew "Tom" Daschle is a former U.S. Senator from South Dakota and former U.S. Senate Majority Leader. He is a member of the Democratic Party....

, Children's Defense Fund head Marian Wright Edelman
Marian Wright Edelman
Marian Wright Edelman is an American activist for the rights of children. She is president and founder of the Children's Defense Fund.-Early years:...

, Bill Clinton, and Hillary Clinton. About the latter, Kennedy said, "Mrs. Clinton ... was of invaluable help, both in the fashioning and the shaping of the program and also as a clear advocate."

SCHIP is located at Title IV, subtitle J of H.R. 2015 [105th] Balanced Budget Act of 1997
Balanced Budget Act of 1997
The Balanced Budget Act of 1997, , was signed into law on August 5, 1997. It was an omnibus legislative package enacted using the budget reconciliation process and designed to balance the federal budget by 2002....

. H.R. 2015 was introduced and sponsored by Rep John Kasich [R-OH] with no cosponsors. On 25 June 1997, H.R. 2015 passed House Vote Roll #241 mainly among partisan lines, 270 ayes and 162 nays, with most Democrats in the House of Representatives in opposition.
On the same day, the bill passed in the Senate, with a substitute amendment, by unanimous consent. After a conference between the House and Senate, passage in both House (Roll #345: 346-85) and Senate (Roll #209: 85-15) on the conference substitute became more bipartisan.

State administration

Like Medicaid, SCHIP is a partnership between federal and state governments. The programs are run by the individual states according to requirements set by the federal Centers for Medicare and Medicaid Services
Centers for Medicare and Medicaid Services
The Centers for Medicare & Medicaid Services , previously known as the Health Care Financing Administration , is a federal agency within the United States Department of Health and Human Services that administers the Medicare program and works in partnership with state governments to administer...

. States may design their SCHIP programs as an independent program separate from Medicaid (separate child health programs), use SCHIP funds to expand their Medicaid program (SCHIP Medicaid expansion programs), or combine these approaches (SCHIP combination programs). States receive enhanced federal funds for their SCHIP programs at a rate above the regular Medicaid match.

By February 1999, 47 states had set up SCHIP programs, but it took effort to get children enrolled. That month, the Clinton administration launched the "Insure Kids Now" campaign, designed to get more children enrolled; the campaign would fall under the aegis of the Health Resources and Services Administration
Health Resources and Services Administration
The Health Resources and Services Administration , is an agency of the U.S. Department of Health and Human Services located in Rockville, Maryland...

. By April 1999, some 1 million children had been enrolled, and the Clinton administration set a goal of raising the figure to 2.5 million by 2000.

States with separate child health programs follow the regulations described in Section 42 of the Code of Federal Regulations, Section 457. Separate child health programs have much more flexibility than Medicaid programs. Separate programs can impose cost sharing, tailor their benefit packages, and employ a great deal of flexibility in eligibility and enrollment matters. The limits to this flexibility are described in the regulations, and states must describe their program characteristics in their SCHIP state plans. Out of 50 state governors, 43 support SCHIP renewal. Some states have incorporated the use of private companies to administer portions of their SCHIP benefits. These programs, typically referred to as Medicaid managed care
Medicaid managed care
Medicaid managed care provides for the delivery of Medicaid health benefits and additional services in the United States through an arrangement between a state Medicaid agency and managed care organizations that accept a set payment – “capitation” – for these services...

, allow private insurance companies or health maintenance organizations to contract directly with a state Medicaid department at a fixed price per enrollee. The health plans then enroll eligible individuals into their programs and become responsible for assuring SCHIP benefits are delivered to eligible beneficiaries.

In Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...

, SCHIP funds are used to expand eligibility for the state's Medicaid program. Thus all Medicaid rules and regulations (including cost sharing and benefits) apply. Children from birth through age 18 who live in families with incomes above the Medicaid thresholds in 1996 and up to 200% of the federal poverty level are eligible for the SCHIP Medicaid expansion program. In 2008, the maximum annual income needed for a family of four to fall within 100% of the federal poverty guidelines was $21,200, while 200% of the poverty guidelines was $42,400.

Other states have similar SCHIP guidelines, with some states being more generous or restrictive in the number of children they allow into the program. SCHIP Medicaid expansion programs typically use the same names for the expansion and Medicaid programs. Separate child health programs typically have different names for their programs. A few states also call the SCHIP program by the term "Children's Health Insurance Program" (CHIP).

States are allowed to use Medicaid and SCHIP funds for premium assistance programs that help eligible individuals purchase private health insurance. As of 2008 relatively few states had premium assistance programs, and enrollment was relatively low. Interest in this approach remained high, however.

In August 2007, the Bush Administration announced a rule requiring states (as of August 2008) to sign up 95% of families with children, earning 200% of the federal poverty level, before using the funds to serve families earning more than 250% of the federal poverty level. The federal government said that 9 out the 17 states that offer benefits to higher-earning families were already compliant. Opponents of this rule argued that signing up higher-income families makes lower-income families more likely to sign up, and that the rule was incompassionate toward children who would otherwise go without medical insurance.

Debate over impacts

SCHIP has cost the federal government $40 billion over its first 10 years, and the debate over its fiscal impacts reflects the larger debate in the U.S. over the government's role in health care.

In 2007, researchers from Brigham Young University
Brigham Young University
Brigham Young University is a private university located in Provo, Utah. It is owned and operated by The Church of Jesus Christ of Latter-day Saints , and is the United States' largest religious university and third-largest private university.Approximately 98% of the university's 34,000 students...

 and Arizona State
Arizona State University
Arizona State University is a public research university located in the Phoenix Metropolitan Area of the State of Arizona...

 found that children who drop out of SCHIP cost states more money because they shift away from routine care to more frequent emergency care situations. The conclusion of the study is that an attempt to cut the costs of a state healthcare program could create a false savings because other government organizations pick up the tab for the children who lose insurance coverage and later need care.

Detractors of the program focus on the impact to the private health insurance industry. In a 2007 analysis by the Congressional Budget Office
Congressional Budget Office
The Congressional Budget Office is a federal agency within the legislative branch of the United States government that provides economic data to Congress....

, researchers determined that "for every 100 children who gain coverage as a result of SCHIP, there is a corresponding reduction in private coverage of between 25 and 50 children." The CBO speculates this is because the state programs offer better benefits at lower cost to enrollees than the private alternatives. A briefing paper by libertarian think-tank Cato Institute
Cato Institute
The Cato Institute is a libertarian think tank headquartered in Washington, D.C. It was founded in 1977 by Edward H. Crane, who remains president and CEO, and Charles Koch, chairman of the board and chief executive officer of the conglomerate Koch Industries, Inc., the largest privately held...

 estimated the "crowding out" of private insurers by the public program could be as much as 60%.


SCHIP was created in 1997 as a ten-year program; to continue past federal fiscal year 2007, passage of a reauthorization bill was required. The first two reauthorization bills to pass through Congress would also expand the program's scope; President George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....

 vetoed them as improper expansions. A two-year reauthorization bill was signed into law by the President in December 2007 that would merely extend current SCHIP services without expanding any portion of the program. With the 2008 Presidential and Congressional elections bringing Democrats to a majority in both houses of Congress and to the Oval Office, SCHIP was reauthorized and expanded in the same bill through fiscal year 2013.

HR 976

In 2007, both houses of Congress passed a bipartisan measure to expand the SCHIP program, . The measure would have expanded coverage to over 4 million more participants by 2012, while phasing out most state expansions in the program that include any adults other than pregnant women. The bill called for a budget increase for five years totaling $35 billion, increasing total SCHIP spending to $60 billion for the five-year period. Opposition to HR 976 focused on the $35 billion increase in government health insurance as well as $6.5 billion in Medicaid benefits to illegal immigrants. Originally intended to provide health care coverage to low-income children, HR 976 was criticized as a giveaway that would have benefited adults as well as non-U.S. citizens. The program expansion was to have been funded by sharply increasing federal excise taxes on tobacco products. On the other hand, opponents said this proposed expansion was for families with annual incomes up to $82,600 (400 percent of the federal poverty level)

On October 3, 2007, President Bush vetoed the bill, stating that he believed it would "federalize health care", expanding the scope of SCHIP much farther than its original intent. The veto was the fourth of his administration. After his veto, Bush said he was open to a compromise that would entail more than the $5 billion originally budgeted, but would not agree to any proposal drastically expanding the number of children eligible for coverage.

On October 18, 2007, the House of Representatives fell 13 votes short (273-156) of the two-thirds majority required to override the president's veto, although 44 Republicans joined 229 Democrats in supporting the measure.

HR 3963

Within a week of the failed veto override vote, the House passed a second bill attempting a similar expansion of SCHIP. According to Democrats, the second bill, , created firmer caps on income eligibility, prevented adults from joining, and banned children of illegal immigrants from receiving benefits. According to its opponents, however, this second proposed expansion was for families with annual incomes up to $62,000 (300 percent of the federal poverty level). The Senate passed the measure on November 1, 2007, but on December 12, 2007, Bush vetoed this bill as well, saying it was "essentially identical" to the earlier legislation, and a House vote in January 2008 failed to override the veto.

Public Law 110-173

Congress ultimately passed , which extended SCHIP funding through March 31, 2009, and the President signed it into law on December 21, 2007.

2009 reauthorization

In the wake of President Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

's inauguration and the Democrats' increased majorities in both houses of Congress, legislative leaders moved quickly to break the political stalemate over SCHIP expansion. On January 14, 2009, the House passed on a vote of 290-138. The bill authorized spending an added $32.8 billion to expand the health coverage program to include about 4 million more children, including coverage of legal immigrants with no waiting period for the first time. A cigarette tax increase of 62 cents—bringing the total tax on a pack of cigarettes to $1.01—an increase of tax on chewing tobacco from $0.195/lb. to $0.50/lb.—as well as tax increases on other tobacco products will fund the program's expansion. On January 29, the Senate passed the house bill by a 66-32 margin, with two amendments. The House accepted the amended version on a vote of 290 to 135, and President Obama signed the bill into law as on February 4, 2009.

Arizona rescission

In early 2010, Arizona
Arizona ; is a state located in the southwestern region of the United States. It is also part of the western United States and the mountain west. The capital and largest city is Phoenix...

 Governor Jan Brewer
Jan Brewer
Janice Kay "Jan" Brewer is the 22nd and current Governor of the U.S. state of Arizona and a member of the Republican Party. She is the fourth woman, and third consecutive woman, to hold the office...

, along with the House and Senate of the state passed a budget that eliminated S-CHIP, known as KidsCare in Arizona. As of 22 April 2010, the state assembly, after learning they will lose federal matching and stimulus funds, is looking at restoring some of the program, but not allowing new enrollment.

See also

  • Cigarette taxes in the United States
    Cigarette taxes in the United States
    In the United States cigarettes are taxed at both the federal and state levels, in addition to any state and local sales taxes and local cigarette-specific taxes. Cigarette taxation has appeared throughout American history and still presents itself prominently today. Overall public health officials...

  • Graeme Frost
    Graeme Frost
    Graeme Frost gained fame in 2007 as a then seventh-grade student from Baltimore who gave the United States Democratic Party weekly radio address on September 28, 2007 promoting the State Children's Health Insurance Program as a living example of someone helped by the program.-Radio address:Graeme...

  • Health insurance in the United States
    Health insurance in the United States
    The term health insurance is commonly used in the United States to describe any program that helps pay for medical expenses, whether through privately purchased insurance, social insurance or a non-insurance social welfare program funded by the government...

  • Medical record
    Medical record
    The terms medical record, health record, and medical chart are used somewhat interchangeably to describe the systematic documentation of a single patient's medical history and care across time within one particular health care provider's jurisdiction....

  • PeachCare
    PeachCare for Kids is a low-cost health insurance program for children of uninsured, low-income families in the state of Georgia who do not qualify for Medicaid...

  • TexCare
    TexCare is a program developed by the State of Texas to raise awareness of the children’s health insurance options available, and to help Texas families obtain and utilize affordable coverage for their uninsured children...

External links