The State Children’s Health Insurance Program (SCHIP) is a program designed to improve the availability and accessibility of health coverage to low-income children and pregnant women in families that have annual income above Medicaid eligibility levels but have no health insurance.
Under the current SCHIP program, the federal government sets basic requirements for SCHIP in place, but ultimately each state has the flexibility to design its own version of SCHIP within the federal government’s pre-decided framework. It is therefore not surprising that there is significant inter-state variation across for example; some states may extend SCHIP coverage of prenatal care to pregnant women when certain conditions are met.
To set up a SCHIP program, each State must first submit a Title XXI plan for approval by the Secretary that details how the State intends to allocate its received funds to fulfill requirements. After each state designs its SCHIP program and health plans they then enroll eligible individuals into their programs and become responsible for assuring SCHIP benefits are delivered to these beneficiaries.
The state SCHIP program can be designed in one of three ways.
Under this program, a state receives federal funding to provide child health assistance to uninsured, low-income children that meet the requirements of section 2103 of the Social Security Act. These programs provide more flexibility than Medicaid programs by offering tailored benefit packages and a great deal of flexibility in eligibility and enrollment policies.
These programs have the option of charging premiums, enrollment fees and cost sharing for beneficiaries. Unfortunately, these can have a significant and immediate negative impact on low-income individuals’ coverage and access to care as they often cannot afford even nominal out-of-pocket costs. Unlike the case with “crowd out” (when individuals migrate from private to public health coverage), these individuals cannot replace their public with private coverage; instead they become uninsured.
With this program, a state receives federal funding to expand the eligibility for Medicaid to a wider net of targeted low-income children that meet the requirements of section 2103 of the Social Security Act. As the SCHIP funds are channeled into the state's Medicaid program, all Medicaid rules and regulations (such as cost sharing and benefits) apply.
These programs are required to follow the federal Medicaid rules for cost sharing and benefits, which entitles SCHIP enrollees to mandatory services such as Early and Periodic Screening, Diagnostic, and Treatment coverage and exempts the majority of children from enrollee cost sharing.
Under this program, a state receives federal funding to implement both expansion of Medicaid and develop a separate SCHIP entity. This usually results in the state operating both an expanded Medicaid program and one or multiple separate SCHIP programs concurrently such that there are multiple approached designed to address different population sub-groups.
As of January 1, 2015, an overwhelming 41 states implemented a combination program, 2 states operated separate SCHIP programs while 8 states and 5 territories ran a Medicaid expansion SCHIP programs. This could be partly explained by a shift from separate SCHIP to combination programs after two amendments in the Patient Protection and Affordable Care Act (ACA) were made.
These required states to transfer some separate SCHIP enrollees into Medicaid by effectively raising eligibility levels: a mandatory income disregard equal to 5% of the federal poverty level (FPL) and the mandatory transfer of 6- to 18-year-olds between 100-133% FPL from separate SCHIP programs into Medicaid.
In addition to designing and implementing these three program types, states are allowed to use their allocated Medicaid and SCHIP funds to establish premium assistance programs that offer aid to eligible individuals to purchase private health insurance.