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.

In Federal Fiscal Year 2008, the program covered more than 7 million children. The Children's Health Insurance Program Reauthorization Act (CHIPRA, Public Law 111-3) was signed by President Obama February 4, 2009. By reauthorizing CHIP and financing it through FY 2013, the measure preserves coverage for millions of children and provides resources for states to reach additional uninsured children.