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The Children’s Health Insurance Program (CHIP)

Summary

The Children’s Health Insurance Program (CHIP) is a federal-state financed program that provides health insurance to about 9 million children in families who are ineligible for Medicaid and unable to purchase private coverage.  Since its inception in 1997, CHIP, together with Medicaid, has helped to reduce the number of uninsured children by a remarkable 68 percent. CHIP has a proven track record of providing high-quality, cost-effective coverage for low-income children and pregnant women in working families.

CHIP is funded jointly by the federal government and states through a formula based on the

Medicaid Federal Medical Assistance Percentage (FMAP).  See here for FMAP rates for Medicaid by state. As an incentive for states to expand their coverage programs for children, Congress created an “enhanced” federal matching rate for CHIP that is generally about 15 percentage points higher than the Medicaid rate — averaging 71 percent nationally. For example, if a state has a 50 percent match rate for Medicaid, they may have a 65 percent match rate for CHIP. See here for FMAP rates for CHIP by state.

On March 18, 2020, the Families First Coronavirus Response Act (FFCRA) was enacted to respond to the COVID-19 public health emergency (PHE). The FFCRA provides states with a temporary 6.2 percent payment increase in FMAP funding. States qualify for this enhanced funding by adhering to the Maintenance of Effort requirement, which ensures eligible people enrolled in Medicaid stay enrolled and covered during the PHE. This requirement increased retention in Medicaid and potentially reduced churn in and out of the program. The additional funds are available to states from January 1, 2020 through the quarter in which the public health emergency period ends.

Federal funding for CHIP expired for a period of months back in 2017 because Congress did not intervene and pass legislation to extend funding for the program.  This caused great instability for states administering the program and for families who relied on CHIP coverage and, in some instances; states began taking measures to shutter their CHIP programs due to lack of funds.  Fortunately, as part of a continuing resolution to fund the federal government, legislation was enacted on Jan. 22, 2018 to reinstate funding for CHIP for five years until 2023. Legislation was later enacted in February 2018, the Bipartisan Budget Act of 2018, that provided an additional four years of funding for CHIP giving the program a 10-year combined reauthorization.

 

In November 2021, the U.S. House of Representatives passed the Build Back Better Act (H.R. 5376).  In that legislation, CHIP is permanently authorized to provide states the option to increase Medicaid and CHIP eligibility levels for children up to 300 percent of FPL without receiving a waiver. It also authorizes permanent funding for CHIP and several programs related to CHIP, including the pediatric quality measures program and the child enrollment contingency fund to provide states with additional funding in the event its CHIP allotment is insufficient. It ensures that all CHIP programs are able to receive low-cost prescription drugs. The Senate is expected to act on this legislation by the end of calendar year 2021.

ACP has been a staunch supporter of CHIP over the years and has advocated for a long-term extension of funding for the program and for enhanced eligibility for children in Medicaid and CHIP.  ACP also joined forces with a coalition of five other front line physician organizations to advocate for continued funding for CHIP and other key federal workforce programs that support primary care.

Resources