The State Children's Health Insurance Program: A Look at the Numbers

An Urban InstituteProgram to AssessChanging Social PoliciesThe StateChildren’sHealthInsuranceProgram: A Look at the NumbersThe StateChildren’sHealthInsuranceProgram: A Look at the NumbersFrank UllmanBrian BruenJohn HolahanAssessingthe NewFederalismOccasional Papers An Urban InstituteProgram to AssessChanging Social PoliciesThe StateChildren’sHealthInsuranceProgram:A Look at the NumbersFrank UllmanBrian BruenJohn HolahanAssessingthe NewFederalismOccasional Paper Number 4The UrbanInstitute2100 M Street, N.W.Washington, D.C. 20037Phone: 202-833-7200Fax: 202-429-0687E-Mail: paffairs@ui.urban.orghttp://www.urban.org Copyright qMarch 1998. The Urban Institute. All rights reserved. Except for short quotes, no part of this book may bereproduced in any form or utilized in any form by any means, electronic or mechanical, including photocopying,recording, or by information storage or retrieval system, without written permission from The Urban Institute.This report is part of The Urban Institute’s Assessing the New Federalismproject, a multi-year effort to monitor andassess the devolution of social programs from the federal to the state and local levels. Project codirectors are AnnaKondratas and Alan Weil. The project analyzes changes in income support, social services, and health programs. Incollaboration with Child Trends, Inc., the project studies child and family well-being.The project has received funding from the Annie E. Casey Foundation, the Henry J. Kaiser Family Foundation, theW.K. Kellogg Foundation, the John D. and Catherine T. MacArthur Foundation, the Charles Stewart Mott Foundation,the Commonwealth Fund, the Robert Wood Johnson Foundation, the Weingart Foundation, the McKnightFoundation, and the Fund for New Jersey. Additional funding is provided by the Joyce Foundation and the Lynde andHarry Bradley Foundation through a subcontract with the University of Wisconsin at Madison.The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public considera-tion. The views expressed are those of the authors and should not be attributed to The Urban Institute, its trustees,or its funders.The authors are grateful for input provided by Lisa Dubay, Judy Feder, Genevieve Kenney, and Alan Weil. Assessing the New FederalismAssessing the New Federalismis a multi-year Urban Institute projectdesigned to analyze the devolution of responsibility for social pro-grams from the federal government to the states, focusing primarilyon health care, income security, job training, and social services.Researchers monitor program changes and fiscal developments. In collaborationwith Child Trends, Inc., the project studies changes in family well-being. Theproject aims to provide timely, nonpartisan information to inform public debateand to help state and local decisionmakers carry out their new responsibilitiesmore effectively.Key components of the project include a household survey, studies of poli-cies in 13 states, and a database with information on all states and the Districtof Columbia, available at the Urban Institute’s Web site. This paper is one in aseries of occasional papers analyzing information from these and other sources. ContentsIntroduction 1Program Overview 3Guidelines for New State Programs 3Eligibility Standards 3Scope of Benefits 4Out-of-Pocket Costs 5Guidelines for Medicaid Expansion 5Avoiding Substitution and Crowd-Out 6Distribution of CHIP Funds 6Dollars Available and Child Populations 8States’ Capacity to Provide New Coverage 10Measuring the Target Population 10Estimating Potential Coverage 13Why States May Underutilize CHIP Funds 15Why States May Use More CHIP Funds 16Conclusion 18Notes 21About the Authors 23 The State Children’s Health Insurance Program: A Look at the NumbersIntroductionThe Balanced Budget Act of 1997 provides approximately $24 billionin funding over the next five years for new children’s health care ini-tiatives.1Most of this spending is earmarked for the new StateChildren’s Health Insurance Program (CHIP), established as Title XXIof the Social Security Act. This program entitles states to block grants in orderto initiate and expand health insurance programs for low-income children withhigher federal matching payments than under Medicaid. Funds are allocatedin proportion to each state’s share of the nation’s uninsured children in familieswith incomes below 200 percent of the federal poverty level (FPL), withadjustments for differences in costs among states. The program allows states tocover currently uninsured children in families with incomes up to 200 per-cent of FPL (and higher in states which already have extensive coverage). Statescannot receive higher matching funds for children currently eligible forMedicaid.The design of CHIP reflected a number of constraints facing policymakersduring the Balanced Budget debate of 1997. These included concerns that any