State Children's Health Insurance Program

The State Children’s Health Insurance Program (SCHIP) was created in the Balanced Budget Act of 1996 and codified as Title XXI of the Social Security Act. SCHIP allows states to expand health coverage to children in families with incomes too high to qualify for traditional Medicaid, but too low to afford private health insurance. In Federal Fiscal Year 2004, the program covered just less than six million individuals.

The initial appropriation for SCHIP was approximately $40 billion spread over ten years, making it a much smaller budget item than Medicaid. A big draw of the program for states is its flexibility and greater amount of federal dollars to match each state dollar.

SCHIP, however, is not an entitlement; it is an optional program in which states may participate. It provides states flexibility and additional funds to cover low-income, uninsured children. Those funds from the U.S. Treasury, though, are capped; when a state’s SCHIP funds are spent, no more are available (with some exceptions). This is unlike Medicaid which—as an entitlement—requires the state to enroll all qualified applicants and allows the state to draw down federal funds to help cover any enrollees beyond its budgeted projection.

As SCHIP nears the end of its authorization (in 2007), it remains a popular program with policymakers and the public. However, the importance of the program has been overshadowed somewhat by the more pressing need to address Medicaid reform. The Bush Administration indicated an interest in early SCHIP reauthorization by folding the process in with Medicaid reform. It will be important for family physicians and their friends to ensure, though, that whenever reauthorization does occur, their voices are heard in shaping SCHIP’s future.