SCHIP gives states matching federal funds to provide health coverage to children in families whose income is modestly above Medicaid limits, typically up to 200 percent of the poverty line (or roughly $34,000 for a family of three) but sometimes a little higher. About 4 million children receive health coverage through SCHIP each month. Some states also use SCHIP funds to cover a limited number of low-income adults, such as parents or pregnant women.
Between 1997 and 2005, the percentage of children who are uninsured fell from 23 to 14 percent, even though the percentage of children with private health coverage declined during this period. The reason for this progress was the increased enrollment of low-income children in SCHIP and Medicaid.
States can use SCHIP funds to create or expand a separate health insurance program for children and/or to provide coverage to additional children within their Medicaid program. Eighteen states use SCHIP funds solely to operate separate SCHIP programs, 11 states plus the District of Columbia use SCHIP funds solely to expand Medicaid, and 20 states rely on a combination approach.
To encourage states to take advantage of federal SCHIP funds and provide low-income children with needed health coverage, SCHIPís matching rate is more favorable to states than the Medicaid rate is. The federal government pays 70 percent of statesí SCHIP-related costs, on average, compared to 57 percent of statesí Medicaid costs.
However, federal SCHIP funds, unlike federal Medicaid funds, are capped; they do not rise automatically to help states compensate for increases in health-care costs or caseloads.
SCHIP is also unlike Medicaid in that it is not part of permanent law; it will expire at the end of fiscal year 2007 if Congress does not reauthorize it. As Congress considers reauthorization, it will be important to ensure that there are sufficient resources to continue the progress in reducing the number of uninsured low-income children by improving children's coverage in SCHIP and Medicaid.