The Children’s Health Insurance Program (CHIP) and its Funding and Regulations

Last Updated: 19 Apr 2023
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Balanced Budget Act of 1977

CHIP was created as part of the Balanced Budget Act of 1977 under a new Title XXI of the Social Security Act(SSA). Since then, other federal laws have provided additional funding and made substantial changes to CHIP. Most remarkably, the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA) which expanded the funds for CHIP and adjusted the formula for allotments( Title XXI provides funds to states enabling them to provide child health assistance to uninsured and low-income children effectively and efficiently.

States must present a plan under this program to be eligible for funds, and the Secretary must approve this plan. States have the option to revise the approved plan in whole or in part at any time through the submittal of a plan revision( States make seek approval from the Centers for Medicare and Medicaid Services(CMS) through the use of the Section 115 waiver authority when they want to amend their program beyond what both laws allow(

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Congress designed CHIP to give states authority over program design compared with Medicaid so states might explore different avenues regarding providing coverage that mirrors the options available in the commercial insurance market( States may design their CHIP program in three ways. They may cover children who are eligible under their Medicaid programs(i.e., CHIP Medicaid expansion), create a separate CHIP program, or adopt a combined program where the state operates a CHIP Medicaid expansion and one or more separate CHIP programs simultaneously.

Federal funding is available for the different designs for services rendered to CHIP children ( Numerous states decided to implement the Medicaid expansion CHIP because they figured the approach could be executed rapidly, however, they began administering separate CHIP and combination programs, because those programs offered greater flexibility in their program design ( . The choices States choices for program design impact the coverage that enrollees receive.

Medicaid rules(Title XIX of the Social Security Act[SSA]) typically apply to states that provide Medicaid coverage to CHIP children( and Title XXI of SSA rules typically applies to states that provide coverage to CHIP children through separate CHIP programs(

Recent Legislation Related to Children's Coverage

The Affordable Care Act(ACA) has consistently bolstered the endeavors to ensure children are covered under Medicaid and CHIP. Under the ACA, states were required to maintain the eligibility threshold for children that are equivalent to the thresholds they had in place when the law was passed to protect the profits achieved in children's coverage protects the gains achieved in children's. Additionally, the ACA also established a minimum Medicaid eligibility level of 133% FPL for all children up to age 19.

The Federal minimum for children ages 6 to 18 years before ACA was 100% FPL. As a result of this change, 21 states transitioned older children from CHIP to Medicaid in 2014 (, 2016). Most states readjusted their Medicaid and CHIP enrollment and renewal processes under the ACA to give beneficiaries a modernized, efficient experience as outlined in the ACA. The ACA also developed an electronic data-driven process to make the enrollment and renewal processes more efficient for Medicaid and CHIP across all states(ccf.georgetown).

In April 2015, the Medicare Access and CHIP Reauthorization Act(MACRA) extended subsidies for CHIP through September 30, 2017. This two-year extension included approval to implement the 23-percentage point increase to improve federal match for CHIP(, 2016). The Medicare Access and CHIP Reauthorization Act of 2015 is a bipartisan legislation signed into law on April 16, 2015. MCRA developed a quality program to repeal the sustainable growth rate formula, and it also changed the way Medicare rewarded clinicians for value over volume(

MACRA provided increased funding for outreach and enrollment grants for states by $40 million in the 2016 fiscal year and 2017 fiscal year. In addition to funding, MACRA extended the Express Lane Eligibility authority for states, which facilitates enrollment and renewal of eligible children until September 2017(, 2016).

Sustaining Children's Coverage Gains

The results of the next CHIP reauthorization debate will have implications for sustaining children's coverage gains. As stated above, CHIP funding was extended through September 2017. Children in Medicaid expansion CHIP programs will still be eligible for Medicaid coverage without additional funding because the ACA maintenance of eligibility provisions for children in Medicaid and CHIP are in place through the 2019 fiscal year. Other children could get coverage through the marketplace and others may become uninsured(, 2016).

As a commitment to continue funding CHIP since it expired on September 30, 2017, Congress passed a law extending CHIP funding for six more years on January 22, 2018. The extension provided stable funding for states to continue their CHIP coverage. Without additional funding available, states were able to operate their CHIP programs by using unused funds from previous years. Nevertheless, some states came close to depleting their funds, leading them to make emergency plans to decrease coverage and inform families of potential coverage reductions( 2018)

Medicaid and CHIP are a primary source of coverage for low-income children. The benefits and financial securities provided under Medicaid and CHIP allow children's access to health care services that result in improving their health and other areas of their lives( Together with Medicaid, CHIP has enormously influenced children's health insurance coverage; the number uninsured children decreased to less than 7 % nationally by 2012, as public financing extended to balance the critical disintegration in private insurance coverage amount children (Rosenbaum, 2015).

Medicaid and CHIP

However, despite these improvements, as of the beginning of 2015, there are approximately five million uninsured children, and the differences in coverage continue based on a child's race/ethnicity and where a child resides ( Approximately two-thirds of remaining uninsured children are eligible for Medicaid and CHIP, suggesting through targeted outreach and enrollments efforts more children can be insured(

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The Children’s Health Insurance Program (CHIP) and its Funding and Regulations. (2019, Mar 12). Retrieved from

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