Children's Health Insurance: SCHIP Enrollment and Expenditure Information

July 25, 2001

The Honorable Christopher S. Bond
Ranking Minority Member
Committee on Small Business
United States Senate

Subject: Children's Health Insurance: SCHIP Enrollment and Expenditure Information

Dear Senator Bond:

The Congress created the State Children's Health Insurance Program (SCHIP) in 1997 to reduce the number of low-income uninsured children in families with incomes that are too high to qualify for Medicaid, the federal-state program that provides health care coverage to certain categories of low-income adults and children. The Congress appropriated $40 billion over 10 years (fiscal years 1998 through 2007) for SCHIP and, on the basis of a formula accounting for the number of a states low-income children, allocates funds annually to the 50 states, the District of Columbia, and the U.S. commonwealths and territories. Each states SCHIP allotment is available as a federal match based on state expenditures. Although the SCHIP statute generally targets children in families with incomes up to 200 percent of the federal poverty level, 13 states programs cover children in families above 200 percent of the federal poverty level.

Expanding the SCHIP-eligible population beyond children to include adults is an issue of ongoing interest. Some analysts have suggested that providing health insurance to parents may lead to increased insurance coverage among children. Medicaid set a precedent for a public program to provide health care coverage for pregnant women. Since the late 1980s, Medicaid has covered eligible pregnant women with the goal of reducing infant deaths and poor birth outcomes (currently, Medicaid requires states to cover pregnant women with incomes up to 133 percent of the federal poverty level). Although the SCHIP statute allows a state to enroll the parents of eligible children if the state can demonstrate it is cost-effective to do so, the cost-effectiveness test is difficult to pass. Recent legislative proposals would broaden states ability to spend federal SCHIP funds to insure the parents of children in public health programs and pregnant women who meet SCHIP income-eligibility criteria.

In response to your concern about ensuring that SCHIP funding is adequate to cover eligible children before considering expansion to others, we are providing information on (1) enrollment and federal expenditures for SCHIP and estimates of the number of and costs to enroll eligible un-enrolled children and income eligible pregnant women and (2) factors that may influence states future expenditures for SCHIP and the availability of funding for any program expansion.

To do our work, we analyzed the March supplements of the 1998 through 2000 Current Population Surveys for data on insurance coverage; interviewed officials from the Centers for Medicare and Medicaid Services (CMS),6 which has oversight responsibility for both SCHIP and Medicaid, and the Health Resources and Services Administration (HRSA), which shares oversight responsibilities for SCHIP with CMS; reviewed the most current, available SCHIP enrollment and expenditure data through 2000;7 interviewed private researchers with knowledge of state programs and SCHIP projections; and reviewed the SCHIP statute. We relied on prior and ongoing work and relevant published literature to identify factors that influence states SCHIP enrollment and expenditures. (For detail on our methodology for determining enrollment and expenditures, see enc. I.) We did our work from April through July 2001 in accordance with generally accepted government auditing standards.

Sincerely yours,
Kathryn G. Allen
Director, Health Care -
Medicaid and Private Health Insurance Issues