WASHINGTON, D.C. - There are an estimated 10.6 million American children - 1:7 - who are uninsured. To reach these children, many of whom come from working families with incomes too high to qualify for Medicaid but too low to afford private health insurance, President Clinton proposed a comprehensive children's health initiative which was included in the recently enacted Balanced Budget Act of 1997.
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The Children's Health Insurance Program (CHIP) sets aside $24 billion over five years for states to provide new health coverage for millions of children - the largest children's health care investment since the creation of Medicaid in 1965. States will be able to use part of their federal funds to expand outreach and ensure that all children eligible for Medicaid and the new CHIP program are enrolled.
At President Clinton's insistence, the program requires that states use this new money to cover uninsured children, not replace existing health coverage. The program also includes important cost-sharing protections so that families will not be burdened with out-of-pocket expenses they cannot afford.
Funds for the program became available to the states on Oct. 1, and the Department of Health and Human Services (HHS) is working closely with states as they design plans in accordance with the new law.
Expanding access The Children's Health Insurance Program, created under the new Title 21 of the Social Security Act, expands health coverage by building on Medicaid. The federal-state health insurance program covers approximately 36 million low-income individuals, including 18 million children.
Because Medicaid allows states flexibility in determining eligibility, states currently cover children whose family incomes range from the federal poverty level to as high as 300% of poverty, although most states cover children in families between 100% and 150% of the poverty level. In the new CHIP program, states may either cover children in families whose incomes are above the Medicaid eligibility threshold but less than 200% of poverty, or within 50 percentage points over the state's current Medicaid income limit for children.
Under the new program, states have flexibility in covering eligible children. States may choose to expand their Medicaid programs, design new child health insurance programs or create a combination of both. Under this program, a state may offer one of the following benchmark plans: the standard Blue Cross/Blue Shield Preferred Provider Option offered by the Federal Employees Health Benefit Program; a health benefit plan offered by the state to its employees; or the HMO plan with the largest commercial enrollment in the state.
A state may also choose to offer the "equivalent" of one of the benchmark plans. If a state chooses this option, its plan's value must be at least equal to the benchmark plan's and it must include:
In addition, if the plan a state chooses as its benchmark includes coverage for prescription drugs, mental health services, vision care and hearing-related expenses, the state's "equivalent" plan must include similar benefits. Under the law, New York, Pennsylvania and Florida can continue to offer their current benefit arrangements (with some modifications to comply with the law's cost-sharing protections).
Patient out-of-pocket costs for this program are allowed, but strictly limited. If a state expands its Medicaid program, then existing Medicaid limits apply to the newly enrolled. If a new health plan is developed, premiums for families whose income is less than 150% of the poverty level cannot exceed $19 per family per month and copayments must be nominal. For families with incomes above 150% of poverty, cost-sharing must be based on an income-related sliding scale with an annual total for all children not to exceed 5% of the family's income.
To prevent states from shifting children from the traditional Medicaid program to this new program, states must not tighten the Medicaid eligibility standards for children that were in place on June 1. States that use CHIP funds to expand Medicaid must maintain the Medicaid eligibility standards that were in place on April 15.
In addition, states must enroll all children who meet Medicaid eligibility rules in the Medicaid program, not in the new CHIP plan.
All states must design their programs to prevent private cost shifting as well. In their child health plans, states will describe methods they will use to prevent "crowd out" or the shifting of children from other insurance programs to CHIP.
Under the new law, states will be eligible to receive an enhanced federal matching rate for state programs approved by the health secretary, which expands access to targeted, low-income children under the CHIP program. Funds will be allocated to each participating state according to their number of uninsured and low-income children, accounting for regional cost differences.
Minimum available state allocations, which were published in the Federal Register in September, range from $3.5 million for Vermont's relatively small population to a high of $855 million for California. States may use up to 10% of the federal share of CHIP expenditures for outreach, services other than the standard benefit package for eligible children and administrative costs. To access the FY 1998 allocation, states must have their CHIP plans approved by the secretary of health by Sept. 30, 1998. States that meet this deadline, and have spent funds insuring targeted children during that year, can receive funding retroactive to Oct. 1, 1997.
The amount of money the federal government gives states for their Medicaid program will not change for children who meet traditional Medicaid eligibility rules. Children brought into Medicaid under eligibility expansions implemented after April 15 whose families have incomes up to 200% of poverty or 50 percentage points over current state standards for children will be eligible for a higher match by the federal government than that currently available under Medicaid.
HHS is working closely with states to design CHIP plans which meet the requirements of the new law. HHS has written to each state outlining the new program, and has published a list of the state allotments; a preliminary check-list of information states must submit to HHS when applying for their allotments; and answers to the most commonly asked questions from states about how to develop their children's health insurance programs. HHS will work with states to expedite the development and implementation of state CHIP plans.
Since 1993, HHS has approved Medicaid waivers for 17 states for comprehensive health care reform projects that have allowed states to control costs and expand coverage. In addition, HHS has approved requests from 19 states for Medicaid waivers as part of larger welfare reform projects, as well as 25 local Medicaid demonstration projects. When fully implemented, these demonstration projects will extend health coverage to 2.2 million parents and children who otherwise would be uninsured.
President Clinton also signed into law the Health Insurance Portability and Accountability Act of 1996, creating important new protections for an estimated 25 million Americans (approximately 1:10) who move from one job to another, who are self-employed or who have pre-existing medical conditions.
The new Children's Health Insurance Program also builds on the Clinton administration's long standing commitment to improving health care for children. The president has issued guidelines to eliminate easy access to tobacco products and to prohibit companies from advertising tobacco to kids. He also recently announced that in 1996, more than 90% of America's toddlers received the most critical doses of each of the routinely recommended vaccines - surpassing the goal he set in 1993. And, the Food and Drug Administration recently released a rule that requires manufacturers to do studies on pediatric populations for new prescription drugs as well as those currently on the market.
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