Summary and Background
The Children’s Health Insurance Program (CHIP) has played a crucial role in helping to reduce the rate of uninsured low-income children over the past twelve years. CHIP was created in 1997 to provide health insurance coverage to children who would otherwise be uninsured. The program is targeted to low-income families who do not qualify for Medicaid, but are unable to afford private insurance. Most newly-enrolled children have been previously uninsured or recently lost their Medicaid or private health coverage. There were 6.7 million children enrolled in CHIP in Fiscal Year 2007.
S.275, the Children’s Health Insurance Program Reauthorization Act of 2009 (the "CHIP Reauthorization Act"), reflects Senate Democrats’ commitment to ensuring that low-income children receive quality health care coverage. The reauthorization legislation would invest $32.8 billion over four and a half years in new funding for CHIP, extending coverage to 4.1 million children. The bill would strengthen CHIP’s financing, increase health insurance coverage for low-income children, and improve the quality of health care children receive.
The Senate is expected to consider the text of S.275,as a substitute amendment to the House-passed Children’s Health Insurance Program Reauthorization Act of 2009 (H.R.2), during the week of January 26, 2009.
Enactment of the CHIP Reauthorization Act would:
Lower the rate of uninsured low-income children. The CHIP Reauthorization Act would provide coverage for 6.7 million children currently enrolled in CHIP, and for an additional 4.1 million children who are uninsured today. The legislation would provide financial incentives for states to lower the rate of uninsured children by enrolling eligible children in CHIP and Medicaid. It would also remove the 5-year waiting period for legal immigrant children and pregnant women, giving states the option to provide them with access to Medicaid and CHIP.
Strengthen CHIP by increasing and targeting funding. In order to address the funding shortfalls faced by many states experiencing budget deficits, 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. S.275 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 initiatives to raise awareness of CHIP, to efforts targeting children in rural areas with high populations of eligible but uninsured children and higher incidence of racial and ethnic disparities of coverage. Additional targeted efforts would find and enroll eligible Native American children. The bill would also implement an "express lane" enrollment option 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. S.275 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 translation and interpretation services in CHIP.
Prioritize children’s coverage in CHIP. The CHIP Reauthorization Act would require states to transition childless adults and parents out of CHIP coverage and eliminate future state waivers for covering adults in CHIP.
Improve access to critical benefits. S.275 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 legislation would require dental coverage ensuring that children benefit from oral health care. The bill also provides an option for states to provide dental coverage to children enrolled in private health insurance that lacks dental coverage.
Reduce administrative barriers. The bill would extend citizenship documentation requirements to CHIP and would create an option for states to use an applicant’s Social Security Number (SSN) to confirm eligibility for Medicaid or CHIP. The bill would also encourage states to standardize enrollment procedures and eliminate requirements for face-to-face interviews to complete enrollment in public health programs. In addition, states would be required to describe their efforts to lower administrative barriers to enrollment.
Improve access to private coverage options through new premium assistance rules. The CHIP Reauthorization Act 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. S.275 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.
This is not the first time the Senate has debated the CHIP Reauthorization Act. In August 2007 (110th Congress), the Senate passed the Children’s Health Insurance Reauthorization Act of 2007 (S.1893) by a vote of 68 to 31. In September 2007 the Senate and House worked together to produce compromise legislation (H.R.976). Unfortunately, President Bush vetoed the bicameral agreement reached between the leaders of the Senate and the House on October 3, 2007 and the veto was sustained after a failed vote in the House.
After continued negotiations, the Senate passed a second bipartisan Children’s Health Insurance Program compromise bill (H.R.3936) by a vote of 64 to 30 on November 1, 2007. President Bush vetoed the compromise legislation on December 12, 2007. On December 18, 2007, the Senate passed the Medicare, Medicaid, and SCHIP Extension Act of 2007 (P.L. 110-173) to extend the Children’s Health Insurance Program through March 31, 2009, ensuring enough funds to maintain current enrollment, which President Bush later signed into law. The maintenance funding is set to expire in March.
With the start of the 111th Congress, Democrats are committed to preserving health coverage for low-income children and extending additional coverage to children who are currently uninsured. S.275, the CHIP Reauthorization Act, was approved by the Senate Finance Committee on January 15, 2009 by a vote of 12 to 7. 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, the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA 2009) (H.R.2), will serve as the vehicle for the Senate to consider the Children’s Health Insurance Program Reauthorization Act. H.R.2 was passed by the House on January 14, 2009 by a vote of 289 to 139. Once the Senate proceeds to the bill, S.275 will be offered as a substitute to H.R.2.
At the time of this writing, no amendments have been offered to S.275.
The Obama Administration has not issued a Statement of Administration Policy (SAP) on S.275.
According to a cost estimate released by the Congressional Budget Office (CBO), S.275 would cost $32.8 billion over the next five years. These costs would be offset by an increase in federal tobacco taxes.
On January 13, 2009, CBO issued a cost estimate for H.R.2. The bill would cost $32.3 billion over the next five years. These costs also would be offset by an increase in federal tobacco taxes. The estimate indicated that H.R.2 would cover an additional 4.1 million children.
At the time of this writing, the Congressional Research Service (CRS) has released four reports on S.275:
CRS, "Projections of FY2009 Federal SCHIP Allotments Under CHIPRA 2009," available at R40129.
CRS, "The Cigarette Tax Increase to Finance SCHIP," available at RS22681.
CRS, "State Medicaid and SCHIP Coverage of Noncitizens," available at R40144.
 The Children’s Health Insurance Program is also referred to as "SCHIP."
 Congressionally Mandated Evaluation of the State Children’s Health Insurance Program, Final Report to Congress, Wooldridge and Kenney, et al., October 2005.