• Issue Brief
  • June 1, 2016

CHIP Issue Brief

CHIP continues to play a critical role in children’s coverage and should be extended 

The Children's Health Insurance Program (CHIP) is a joint federal-state program that provides health insurance coverage for millions of low-income children and pregnant women who are not eligible for Medicaid. While the federal government provides a large share of the funding and sets guidelines for the program, states have the flexibility to design the structure of their individual CHIP programs, including eligibility levels and benefits.

CHIP is designed with children's needs in mind, including pediatric-specific benefits, appropriate provider networks and cost-sharing protections.

  • Many states provide children in CHIP with Medicaid's Early and Periodic Screening, Diagnostic and Treatment (EPSDT) benefit, a strong set of benefits designed to meet children's unique needs.
  • CHIP provides access to a full range of primary, specialty and ancillary pediatric providers to ensure covered children receive comprehensive medically and developmentally appropriate care.
  • Out-of-pocket costs are capped at 5 percent of a family's income in CHIP, which helps ensure low-income families have access to affordable care. 
  • Since the inception of CHIP in 1997, the percentage of uninsured children has decreased by two-thirds, to an historic low of five percent in 2015.
Long-term stability in CHIP funding is needed beyond FY 2017.

  • Current federal funding for CHIP is slated to expire at the end of FY 2017, which would disrupt coverage for millions of children. To ensure maximum stability for children, Congress should enact a long-term extension by the spring of 2017.
  • States need certainty to develop their budgets in early 2017. Most state budgets take effect in July and are already under development. In past years when the federal CHIP funding stream was uncertain, states began implementing procedures to disenroll children and place eligible children on waiting lists well in advance of anticipated funding shortfalls.
  • Historically, providing long-term funding for CHIP has contributed to programmatic innovations and greater success providing children with coverage that meets their needs. Congress should return to this model of predictability and encourage states to make further programmatic improvements that would strengthen children's coverage. 
The next CHIP extension should advance the following goals to strengthen coverage for all children: 
  • Ensure all children have health coverage and timely access to care when they need it 
  • Streamline eligibility and enrollment procedures to reduce red-tape burdens on families
  • Stabilize the child coverage financing structure to provide states predictable and reliable resources
  • Extend the Pediatric Quality Measures Program—the first and only significant federal investment in pediatric health care quality—and further advance the field to improve care and lower costs for families and purchasers of care such as state and federal governments
Extending CHIP funding is critical to prevent significant cuts in most states. 
  • The last CHIP extension in April 2015 provided an enhanced federal CHIP match, which has helped states continue coverage for children and address budgetary shortfalls. If the 23-point enhanced CHIP match is not continued, states may be forced to make cuts to CHIP or Medicaid, threatening children's access to care. 
  • The current enhanced federal matching rate for CHIP varies by state between 88 percent and 100 percent, with an average of 93 percent. Children whose Medicaid coverage is financed through CHIP are currently matched at the enhanced CHIP rate. If CHIP funding is not continued, states will lose the enhanced funding for these populations and receive their lower Medicaid matching rate.