Background and Summary
The Children’s Health Insurance Program (CHIP) was established in 1997 by a bi-partisan majority of Congress to provide health insurance coverage to children who would otherwise be uninsured. CHIP is targeted to low-income families who do not qualify for Medicaid, but are unable to afford private insurance, and the program has made great strides in covering uninsured children. The program requires reauthorization by Congress by September 30th of this year.
On July 19, 2007, the Senate Finance Committee approved S.1893, the Children’s Health Insurance Reauthorization Act of 2007 (the “CHIP Reauthorization Act“) by a vote of 17 to 4. The legislation would reauthorize CHIP, investing an additional $35 billion over five years to strengthen the program’s financing; increase outreach and enrollment for low-income children of the working poor; enhance premium assistance options for low income families; and improve the quality of health care that children receive from public programs like Medicaid and CHIP.
Enactment of the CHIP Reauthorization Act would accomplish the following priorities:
Lower the rate of uninsured low-income children. The CHIP Reauthorization Act would provide coverage for 6.6 million children currently enrolled in CHIP, and for an additional 3.2 million children who are uninsured today. The legislation would also provide financial incentives for states to lower the rate of uninsured children by enrolling eligible children in CHIP and Medicaid.
Strengthen CHIP by increasing and targeting funding. In order to address the funding shortfalls faced by many states in recent years, the CHIP Reauthorization Act would improve the program’s financing rules to ensure resources are better directed to cover eligible children. States’ funding would be based on their spending projections. States would also have access to a contingency fund to cover unforeseen shortfalls arising from economic downturns or emergencies.
Improve state tools for outreach and enrollment. The bill would provide $100 million in new grants to fund outreach and enrollment efforts that increase participation of eligible children in both Medicaid and CHIP. Outreach efforts would range from national efforts to raise awareness of CHIP, to efforts targeting children in rural areas with high populations of eligible but unenrolled children and higher incidence of racial and ethnic disparities of coverage, to targeted efforts to find and enroll eligible Native American children. The bill would also create a $49 million demonstration project allowing up to 10 states to implement “express lane” enrollment for low-income children already eligible for benefits.
Improve the quality of health care for low-income children. The CHIP Reauthorization Act would establish a new framework for improving the quality of health care for children, creating a quality initiative within the U.S. Department of Health and Human Services (“HHS”) charged with developing and implementing quality measures and improving state reporting of quality data.
Help reduce racial and ethnic disparities in coverage and quality. The CHIP Reauthorization Act would implement initiatives to reduce racial and ethnic health care disparities, by improving outreach to minority populations including Native Americans, and providing new funding for state translation and interpretation services in CHIP.
Prioritize children’s coverage in CHIP. The CHIP Reauthorization Act would eliminate childless adult coverage within two years; eliminate future state waivers for parents; and lower the federal reimbursement for existing parent populations. These provisions would encourage states to direct limited CHIP resources to targeted low-income children. States would have an additional option to cover pregnant women in addition to existing options to cover them through a state waiver or through regulation.
Improve access to critical benefits. The CHIP Reauthorization Act would improve access to mental health services by requiring states that offer these services to provide coverage for those services on par with medical and surgical
benefits covered under CHIP. The bill would also provide $200 million in new grants for states to improve accessibility and strengthen dental coverage for children.
Reduce administrative barriers. The bill would create a new option for states to choose in implementing citizenship documentation requirements and would extend to CHIP the requirement to establish citizenship for program enrollees. The bill would also encourage states to standardize enrollment procedures, and to eliminate requirements for face-to-face interviews to complete enrollment in public health programs. The bill would also require states to detail efforts to lower administrative barriers to enrollment.
Improve access to private coverage options through new premium assistance rules. The bill would expand upon current premium assistance options for states, allowing them to offer a premium assistance subsidy for qualified, cost-effective employer-sponsored coverage to all targeted low-income children who are eligible for child health assistance and who have access to such coverage. The bill would also change the federal rules governing employer-sponsored insurance to make it easier for states to offer premium assistance programs.
Maintain state flexibility. The bill would retain state flexibility to set eligibility levels for the program based on the cost of living in each state, but lower federal matching rates for states newly covering children above 300 percent of the federal poverty level.
Consistent with the 1997 law that created CHIP, the CHIP Reauthorization Act is paid for with new revenue from a $.61 per-pack increase in the excise tax on cigarettes and a corresponding proportional increase on all tobacco products.
S.1893, the CHIP Reauthorization Act, was approved by the Senate Finance Committee on July 19, 2007, by a vote of 17to 4. As discussed above, a tax on tobacco products generates the revenue to pay for CHIP under this bill. Because the Constitution requires all revenue measures to originate in the House, a House bill, H.R.976, will serve as the vehicle for the Senate to consider the CHIP Reauthorization Act. Once the Senate proceeds to the bill, the substance of S.1893 will be offered as a substitute to H.R.976.
The DPC will publish information on amendments when it becomes available.
The Bush Administration has issued a Statement of Administration Policy indicating its opposition to this legislation and the President’s intent to veto the bill if it is presented to him in its current form.