The Children's Health Insurance Program (CHIP), formally known as State Children's Health Insurance Program (SCHIP), is a program that was proposed and enacted into law as part of the Balanced Budget Act of 1997. It is a firm partnership between the Federal and each individual state government – it is administered by the state governments, but its funding is jointly covered by the federal and state governments with the federal government paying a higher share of CHIP costs up to a predetermined total amount for each state.
The purpose of CHIP was to provide health coverage in conjunction with Medicaid by targeting insurance coverage to the uninsured, low-income children whose family income is too much to be eligible for Medicaid, but still too little to afford private coverage. Those who qualify typically earn up to 200 percent of the Federal Poverty Level (FPL).
Federal CHIP funds from states are also subject to redirection due to the financing structure laid out by CHIPRA. This means that after two years, any unspent CHIP funds remaining in a state’s allotment will be redistributed to states that require additional financing.
Additionally, a state’s total CHIP spending is calculated using the CHIP formula that is adjusted every two years. Through appropriate analyses, states that increase their spending of federal CHIP funds are identified and effectively awarded by securing increases in their allotted CHIP funding, while those states that do not spend their full federal allotments forfeit a portion of their CHIP allotments.
With their allocated funding, individual states have the responsibility of structuring their own program. They have the choice of expanding Medicaid coverage, creating an entirely separate CHIP program, or combining the two options in order to simultaneously provide health benefits for sub-populations of children.
The Federal government establishes general guidelines regarding the administration of CHIP benefits. Broadly speaking however, each state is responsible for the design of its program – this encompasses eligibility criteria, specific benefit packages, payment levels for coverage, and operating procedures. Individuals must check with the CHIP office in their home state to confirm their family's eligibility to receive benefits.
To qualify for this benefit program, one must be under 19 years of age or be a primary guardian of a child under the age of 19, not covered by any form of health care (including Medicaid), and a U.S. national, citizen, permanent resident or legal alien.
Regardless of the approaches a state decides to take in providing children's health insurance coverage, there are federal laws in place to ensure the state delivers a minimum set of benefits. These include the following medical services:
- “Well-child” doctor and dental visits free of cost
- Preventive care (including doctor's visits and immunizations)
- Prescriptions
- Hospitalization
- Emergency services
- Vision and Dental care
All states must offer these minimum requirements but many will also provide more comprehensive coverage for children in need. States may also extend CHIP coverage of prenatal care to pregnant women when certain conditions are met.
Integral to the running of both Medicaid and CHIP is the Medicaid and CHIP Payment and Access Commission (MACPAC). This is Congressional advisory commission provides makes policy recommendations to the Congress and states which pertain to issues such as: eligibility and enrollment, access to healthcare, payment policies, benefits and coverage policies, quality of care, and the interaction of Medicaid and CHIP with Medicare and the health care system.
The commission is required to submit two reports a year which include their policy recommendations and also equip Congress and the public with a better understanding of the function of the Medicaid and CHIP programs, and any highlighted key policy and data issues.
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