Numbers Crunched: CHIP Helps Close Health Insurance Gap

Since creation of the Children’s Health Insurance Program (CHIP) in 1997, the number of uninsured children has fallen nationally from 10.7 million (15 percent of all children) to 6.6 million (9 percent of all children), according to a 50-state examination conducted by The Pew Charitable Trusts and the John D. and Catherine T. MacArthur Foundation. The report analyzes spending and enrollment data for CHIP programs in all 50 states plus the District of Columbia, and found wide variation in implementation among the states. It also considered the impact of the Patient Protection and Affordable Care Act (ACA) (P.L 111-148) on CHIP funding.

CHIP

CHIP is jointly funded by federal and state funds. In total, CHIP covers 8.1 million children in the United States. Federal contributions toward CHIP in each state are capped; states have two years to spend the federal funds allotted to them, otherwise the funds can be distributed to other states. States are given flexibility in structuring their programs and spending designated dollars, which allows for wide variation in how states have chosen to extend health insurance coverage to uninsured children. States must offer benefits above a federally-defined minimum, but may impose cost sharing or cap their CHIP enrollment.

States have three options for administering CHIP services: as an expansion to the state’s Medicaid program; separately from the state’s Medicaid program; or a combination of Medicaid expansion and separate CHIP program that cover different populations with separate eligibility criteria. All states have the option to cover specific populations of low-income individuals other than children; 200,000 such individuals are enrolled in CHIP overall.

Report Findings

The report found that CHIP is a relatively small program for states with regard to spending. State-funded CHIP spending amounted to 0.3 percent of revenue from states’ own sources in 2012; in comparison, Medicaid averaged 16 percent. From 2005 to 2012, CHIP spending experienced an inflation-adjusted compound annual growth rate of 5.5 percent, double that of overall national health expenditures; during that time period, enrollment in CHIP grew 32 percent. Overall numbers can be misleading, however. State spending in Arizona decreased by 27.2 percent, in part due to the state’s decision to freeze CHIP enrollment; conversely, New Mexico’s spending increased by 27.2 percent. There is also a wide variety in spending per child, ranging from under $1,000 in five states to over $2,000 in six states and the District of Columbia.

The ACA included CHIP-related provisions that will impact the program. The law funds CHIP through 2015; it will increase the federal match rate by up to 23 percent in October 2015—the federal share of CHIP funding due to this increase will average 93 percent. As a result, the report predicts that state spending on CHIP will be dramatically reduced or possibly eliminated in some states. The ACA also streamlines eligibility determinations for CHIP, and allows states to expand their CHIP programs to include children of low-income state employees. The report believes that because of these changes, the ACA will have a significant effect on CHIP.