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"SCHIP: Medicaid’s Younger Sibling" by Robert Seifert

The State Children’s Health Insurance Program (SCHIP) was created by Congress in 1997 to provide coverage to children whose family income was too high to qualify for their state’s Medicaid program. In Massachusetts, SCHIP is part of MassHealth, covering about one-fifth of the 460,000 children enrolled. Nationwide, SCHIP covers about 6 million children, many of whom would otherwise be uninsured. Some states have also received permission to used SCHIP funds to cover parents and pregnant women (Massachusetts is in this latter group).

Here is an issue brief describing the past, present and potential future of SCHIP in Massachusetts. SCHIP is a critical part of the Commonwealth’s coverage expansion strategy because of its relationship to MassHealth and, by extension, the health care reform law. This year, SCHIP has been an important policy focus in Washington, and legislative action in the coming months will have significant repercussions in Massachusetts.

One immediate issue is the funding of SCHIP in the current fiscal year. Unlike Medicaid, SCHIP is not an open-ended entitlement.

Instead, each state receives an annual federal allotment. Funds that states do not use may be redistributed to other states that need them, but the amount is finite. This year a number of states are on a path to fall short of the federal funds needed to maintain SCHIP, and at least one – Georgia – suspended new enrollment in the program. In Massachusetts, state officials project that, without Congressional action, MassHealth will face a SCHIP shortfall this year of about $87 million. Because SCHIP and Medicaid are integrated in MassHealth, some SCHIP spending can be shifted to Medicaid, so program cuts are not immediately necessary, but that is not without cost: the state is federally reimbursed for 65 percent of its SCHIP spending, but only 50 percent for Medicaid. More importantly, a shift to Medicaid funding would create additional pressure on the finances of the MassHealth waiver, which is also the financing engine for Commonwealth Care, the centerpiece of health reform.

As the year ticks on, legislation to address the SCHIP shortfall is tied up in the supplemental appropriations bill that addresses funding for military operations in Afghanistan and Iraq, which President Bush vetoed earlier this month. The House passed a new version of the bill on Thursday.

A longer-term issue is the future of SCHIP. Congress originally authorized the program for 10 years, so it must be reauthorized before October 1 of this year. At issue are the level of funding for the program, how the funds will be allocated among the states, and whom the program will be allowed to cover. The Senate will soon consider a reauthorization bill sponsored by Senators Rockefeller, Snowe and Kennedy. The New England Alliance for Children’s Health has been leading efforts to preserve and expand SCHIP to maintain coverage for children in the region. How the issues are resolved in this debate will have important implications for MassHealth and health reform.

Robert Seifert is Executive Director of the Massachusetts Medicaid Policy Institute

This program aired on May 12, 2007. The audio for this program is not available.

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