Human Services News

The Commonwealth Fund:

In this issue: A chance to improve SCHIP, strategies for reining in health spending, and more.

Reauthorization---which has historically been a chance to review, refine, and revamp programs---along with general concerns about the health system have put policy affecting children's health coverage at the top of the list of legislative priorities for the 110th Congress.

This report reviews the program's history and design, describes its present challenges and successes, assesses issues Congress is likely to consider during reauthorization, and explores future policy options including potential changes in eligibility and financing.

Past: History and Design of SCHIP SCHIP was created in 1997 to insure children in families with too much income to qualify for Medicaid and too little to afford private insurance.

Unlike Medicaid, however, these enhanced federal matching payments are limited by national and state-specific "allotments," or annual limits on federal funding.

SCHIP has a system to redistribute federal allotments from states that did not spend the full amount to others that may need higher amounts.

Enrollment barriers and misunderstandings concerning eligibility are two of the major reasons for their lack of enrollment.

The original SCHIP legislation included an option for states to subsidize employer-based family coverage for eligible children if such coverage meets certain rules.

But these rules, which include minimums for benefits and the employer contribution, are considered onerous by states; consequently, few states have implemented premium-assistance programs.

There are also concerns over substandard benefits in SCHIP and out-of-pocket costs that limit access to care, particularly for special-needs children and other vulnerable populations.