Covering All Kids: CHIP Reauthorization, Economic Recovery and Immigrant Children's Health Care Coverage

Covering All Kids: CHIP Reauthorization, Economic Recovery and Immigrant Children's Health Care Coverage


In February, President Obama signed the Children's Health Insurance Program Reauthorization Act (CHIPRA) which renews the State Children's Health Insurance Program (SCHIP) program through 2013 and will enable states to expand coverage to 4 million additional uninsured children while maintaining coverage for the roughly 7 million currently in the program. 

As this Dispatch outlines, the expanded SCHIP program is not only important for individual families, but should also be a critical part of state economic recovery plans.  The new law increases SCHIP funding by $44 billion over the next 5 years.  This is on top of the "baseline" of $5 billion annually, bringing the total to $69 billion -- double the amount made available to states in 2008.  These billions of dollars represent new health care jobs and spending for states that take full advantage of the program.

Key provisions of CHIPRA increase eligibility and funding for kids' health care, with the law providing financial incentives for states to ease enrollment procedures, improve services for communities of color and non-English speaking Americans, and provide dental coverage and mental health parity.  And, as detailed in-depth below, a critical change in the law is giving states the option to use SCHIP money to provide coverage for all documented immigrant children and pregnant women -- a step towards truly universal health care for children in our country and hopefully a step towards universal coverage for all.  

Table of Contents

- Using CHIPRA for Economic Recovery in Your State

- CHIP Reauthorization Overview

- Extending Coverage to Immigrant Children under SCHIP

- Immigrant Children’s Healthcare Case Studies: Utah and Illinois

- Addressing Problems of Onerous Identification Rules

- Conclusion

Using CHIPRA for Economic Recovery in Your State

The importance of reauthorizing and expanding federal funding for SCHIP during the current economic crisis cannot be overstated as a tool for economic recovery.  

A Lifeline for Parents in a Recession: For many working families, receiving health care coverage for their children is both a financial help and, as one set of focus groups highlighted, a "relief to know that they can take their children to the doctor when they are sick, or fill a prescription."  Many families make too much too qualify for Medicaid but lack coverage for dependents at work, so expanding SCHIP coverage means fewer families will face financial crisis or even bankruptcy due to medical bills.  For parents and states themselves, providing ongoing health care saves money in the long run, preventing the higher costs of illness, chronic diseases, and emergency care.

How SCHIP Drives State Job Creation: The average federal match for SCHIP in 2009 will be 72% -- meaning that, on average, for every $1.00 a state spends on CHIP, the federal government pumps an additional $2.57 in health care dollars into the state.  Given that those federal dollars in turn provide wages for health care professionals and other spending that generates state revenues, the ultimate cost to state treasuries to receive those funds is even less.

During the last recession, a Families USA report found that $1 million of state health care spending (in this study, Medicaid) resulted in $3.4 million in new state business activity.  Since SCHIP spending generates even more federal funds dollar for dollar than Medicaid, the economic job engine of investing in SCHIP is even greater.  As the Kaiser Commission on Medicaid and the Uninsured argued in assessing a broad range of studies, federally-supported programs like Medicaid or SCHIP "generates economic activity, including jobs, income and state tax revenues" where the "economic impact is intensified because of the federal match." 

States Need to Take Action Now to Maximize SCHIP Funding:   CHIPRA requires states to spend their allotment within two years (previously it was three years) and return any unused funds, which the feds will redistribute to states that have expanded programs in their states and need more funding.  This creates an incentive for states to be more proactive in ensuring that eligible children are enrolled.  While spending additional money in a recession is obviously a challenge, the short-term and long-term returns to states makes investments in SCHIP one of the smartest economic investments possible.  Finally, Medicaid spending is an economic multiplier, with 29 studies demonstrating that state spending pulls in federal dollars which are distributed in the health care sector and to state and local tax revenues. 

Kaiser Commission on Medicaid and the Uninsured - The Role of Medicaid in State Economies: A Look at the Research
Kaiser Commission on Medicaid and the Uninsured - Turning to Medicaid and SCHIP in an Economic Recession: Conversations with Recent Applicants and Enrollees
Families USA - Medicaid: Good Medicine for State Economies
Physicians for a National Health Program - Medical Bankruptcy - Fact Sheet

SCHIP Reauthorization Overview

The new program includes a range of incentives for states to expand coverage of their children's health care programs:

  • Financial incentives to improve outreach and enrollment: States that exceed their enrollment targets for children and that adopt a certain number of best practices for enrollment and outreach procedures will receive financial bonuses.  Examples of best practices include 12-month continuous eligibility, eliminating in-person application requirements, creating joint Medicaid and SCHIP applications, and providing premium assistance.  And, CHIPRA includes a $100 million grant program for organizations that promote SCHIP and help with enrollment.  This will help states and communities better reach and serve under-served populations.
  • Incentives to expand eligibility for children living in poverty: The new CHIP law also retains state flexibility to set income eligibility levels. The maximum SCHIP matching funds can be reached if states increase eligibility levels for the CHIP program to 300% of poverty ($54,930 for a family of three in 2009).  However, while the new CHIP law also retains state flexibility to set income eligibility levels, states with eligibility standards above 300% of poverty will receive the lower Medicaid match.  (This limitation does not apply to New York or New Jersey which have already raised children's eligibility above 300%.)   The new CHIP law also retains state flexibility to set income eligibility levels, but reduces the matching rate that the federal government will provide for new expansions to children above 300% of the federal poverty level from CHIP to Medicaid levels.
  • Higher matching rates for addressing health disparities:  CHIPRA will provide higher matching rates for states that provide translation and interpretation services for children in SCHIP and Medicaid.  Language can be a steep barrier for non-English speaking Americans trying to navigate health care in the US, causing certain health care disparities, so this will help improve the cultural competency of health care services in these states -- a key goal for eliminating racial and ethnic health disparities.  

Expanded dental and mental health benefits: Importantly, CHIPRA requires states to provide dental coverage for children, a benefit that was previously optional and a frequent target for state budget cutters.  The new law also requires mental health parity, meaning states must cover mental health care at a level on par with coverage for physical care.

Unfortunately, over a few years the law phases out SCHIP coverage for certain parents and adults, impacting 11 states (AZ, AR, ID, IL, MI, MN, NV, NM, OR, RI, WI).  These states will have to either move these adults into Medicaid or use a separate SCHIP block grant that will come out of their SCHIP allotment.

Click here for SCHIP federal match rates by state and here for a state-by-state listing of federal Medicaid matching rates.

Families USA - Children's Health: CHIP Reauthorization
Families USA - CHIPRA 101: Overview of the CHIP Reauthorization Legislation 
Georgetown Center for Children and Families - CHIP Reauthorization Act Overview and Summary 2009
Georgetown Center for Children and Families - CHIP: Putting the New Law to Work Kaiser State Health Facts
Georgetown Center for Children and Families

Extending Coverage to Immigrant Children under SCHIP

The CHIPRA expansions cover an estimated 4 million more kids, including lifting restrictions that excluded an estimated 400,000 legal immigrant children from the SCHIP program.  By implementing the Immigrant Children's' Health Improvement Act (ICHIA), states can target health care to new Americans often most in need of help.

Funding Existing State Programs and Encouraging New Ones: Nineteen states provide some form of health coverage for legal immigrant children and pregnant women using their own funds, despite Congress establishing a 5-year waiting period for legal permanent-resident children to access Medicaid or CHIP as part of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (welfare reform).  For those states, the access to new federal funds under ICHIA will bring immediate and needed fiscal relief with the federal government paying its share to cover all legal immigrant children.

Other states will have the option to modify their own Medicaid and SCHIP programs to offer access to low-income legal immigrant children and pregnant women.  ICHIA specifically covers children under age 21 and non-citizen pregnant women, eligible during pregnancy and up to 60 days post-partum.  ICHIA does not extend state health insurance access to undocumented immigrants.  Especially in tight economic times, federal matching funds could help give legal immigrant children access to preventive care, immunizations, and the full range of health care services they need.

To implement ICHIA, states can elect the new option by notifying Centers for Medicaid & Medicare Services (CMS) of a change in their state plan amendment.  States that already provide coverage to immigrant children and pregnant women must officially notify CMS that they are electing ICHIA in order to receive the higher federal funding rates.  Many states can implement ICHIA through administrative changes while other states may need statutory changes such as new legislation.  Groups such as the National Immigration Law Center are working with state officials to determine which states need to implement additional legislation, based upon state laws.

Strong Public Support for Health Care for Immigrant Children:  The ICHIA option would help keep all children in our communities healthy and is supported by a large margin of American. A national poll conducted at the end of 2008 demonstrates that by a margin of 79-15%, Americans overwhelmingly favor expanding SCHIP to cover all legal immigrant children.

National Immigration Law Center - Immigrant Children's' Health Improvement Act (ICHIA)
National Immigration Law Center - ICHIA fact sheet
Faithful Reform - SCHIP Reauthorization Legislation Can Help Ensure that Children Receive Timely Health Care Coverage
Center on Budget and Policy Priorities - Reducing Disparities in Health Coverage for Legal Immigrant Children and Pregnant Women

Immigrant Children’s Healthcare Case Studies: Utah and Illinois

Work in Utah emphasizes the first steps to coverage for states that don't currently cover legal immigrant children and Illinois the gains for states that fully embrace their immigrant populations, documented and undocumented.

Utah moves forward, but falls short in the end: This session, Utah, which did not previously extend health insurance to legal immigrant children, put forward legislation to implement ICHIA and to provide the state's part of funding for covering legal immigrant children and pregnant women. They came incredibly close to passing SB 225 / HB 171 with identical versions passing both houses. Utah legislators on both sides felt that passing ICHIA was a fiscal boon as they would only have to contribute $400,000 (or 20%) from with the federal government chipping in 80% (or a four for one return.)  Legislators estimated that there were only 800 legal immigrant children who could benefit from the changes, with money coming from the state’s tobacco settlement fund.  Unfortunately, in the last two hours of the session, advocates discovered that the funding source for ICHIA had already been maxed out.  Ultimately, the bill moved farther than many expected it to, with bipartisan support, and legislators and advocates anticipate a more successful session in 2010.

Illinois covers all kids without discrimination: Illinois has gone farthest of any state in extending health care to all children under the age of 18, regardless of immigration status, through the All Kids program.   ICHIA provisions won't change the program but will provide additional matching funds.  Overall, Illinois will receive $344.9 million from the federal government for its children's health care program, a 73% increase from the year before, which will free its own state funds up for helping children still not covered by federal law, including undocumented children who make up just under 4% of All Kids enrollees.

One reason Illinois is committed to covering all children is that it estimates that in 2008, the cost savings realized by All Kids of $34 million more than offset the $22.8 million cost, while expanding coverage to all uninsured kids in its first year. Similarly, California's Republican Governor Arnold Schwarzenegger has emphasized the general savings from expanding insurance coverage for immigrant children, legal and undocumented, in discussing health care reform: 

And let me be clear about something. There is no debate about whether to provide medical care for people who are in California illegally. I know this is controversial but federal law requires us to treat anyone who shows up at an emergency room in need of care. So the decision for my team was do we treat them in emergency rooms at the highest cost available or we do it right and do it efficiently?

In Illinois, the program still faces the inevitable legislative attacks to limit coverage to citizens and certain qualified non-citizens, but its success in extending coverage and cutting costs reinforces the gains from universal coverage.

Utah Health Policy Project-  Utah SB 225 fact sheet
Illinois All Kids

Addressing Problems of Onerous Identification Rules

Even with federal funding for more children, anti-immigrant attitudes have left states grappling with the identification requirements from the Deficit Reduction Act of 2005, which requires evidence of citizenship or legal residency by children enrolling in federally-funded programs.

The result, especially in states such as Georgia that have imposed additional onerous identification rules, has been adverse effects on children who are US citizens, since many low-income families who lack papers are cut off from state Medicaid rolls. The rules have also increased the Medicaid application backlogs in states, and lengthened the period of time that children go without seeing a doctor, which has forced massive numbers of children to go uninsured who would otherwise legally qualify for help:

Dr. Martin C. Michaels, a pediatrician in Dalton, Georgia, who has been monitoring effects of the federal rule, said: “Georgia now has 100,000 newly uninsured U.S. citizen children of low-income families. Many of these children have missed immunizations and preventive health visits. And they have been admitted to hospitals and intensive care units for conditions that normally would have been treated in a doctor’s office."

As the Center for Budget and Policy Priorities found, Medicaid rolls declined in 44 states after Congress imposed the new identification requirements.  Given the incentives in CHIPRA to expand coverage, states will need to address these identification problems or potentially forfeit SCHIP funds.

Progressive States - Kids are collateral damage in immigration witch hunt
Center on Budget and Policy Priorities - New Medicaid Citizenship Documentation Requirement is Taking a Toll: States Report Enrollment is Down and Administrative Costs Are Up


As states are implementing CHIPRA provisions, they should take advantage of the broad federal matching funds to both help children and families in their states and stimulate their economies via the health care sector.  With the additional funds, they should consider moving beyond federal requirements, including covering undocumented children as states like Illinois do, to move towards covering all children.

States should act quickly to expand coverage, including implementing ICHIA provisions, since the federal government will review state CHIP spending in 2011 and 2013 and reallocate funds to states that have expanded coverage. States that underspend CHIP funds in 2010 will actually find themselves with less federal support for existing state programs and reduced capacity to serve their residents at a time of increasing unemployment and associated drops in health care coverage. Conversely, states that actually exceed recruitment targets for CHIP enrollment will receive the performance bonus under CHIPRA, which waiving the 5 year waiting period for legal immigrants can help to reach. 

In the end, states can use CHIPRA to not only create a stronger safety net for children, but to also rebuild their state economies.