Children's Health Insurance Program:

State Implementation Approaches Are Evolving

HEHS-99-65: Published: May 14, 1999. Publicly Released: Jun 14, 1999.

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Pursuant to a congressional request, GAO provided information on the implementation of the State Children's Health Insurance Program (SCHIP), focusing on states': (1) initial SCHIP design choices, including the use of the statutory flexibility to design their programs; (2) pursuit of statutory options, particularly extending coverage to adults in families with children; (3) development of innovative outreach strategies to enroll eligible children; and (4) tailoring of strategies to avoid the crowd out of both private insurance and Medicaid coverage by SCHIP.

GAO noted that: (1) the states and the federal government have made considerable progress in getting SCHIP up and running--despite the short implementation period and the related challenges of establishing a stand-alone program distinct from Medicaid; (2) the distribution of approaches will continue to evolve as the states make their SCHIP plans final; (3) SCHIP design choices are almost evenly divided between expansions of state Medicaid programs and programs with a stand-alone component; (4) as of April 1, 1999, 51 SCHIP plans had been approved, 2 were under review, and 3 had not been submitted; (5) SCHIP design is ongoing, and more states will ultimately embrace a stand-alone component that provides them with greater budgetary control over program costs, permits them to vary benefits, and allows cost sharing; (6) for most children, the SCHIP stand-alone benefit packages in GAO's sample offer coverage comparable to Medicaid; (7) some states have imposed limits on service use similar to those applied to adults in Medicaid; (8) with regard to cost sharing, GAO's analysis suggests that the states' use of cost sharing under SCHIP is generally closer to 1 to 2 percent of income than to the 5-percent maximum allowed by the statute; (9) a growing number of states are exploring statutory options under SCHIP, including family coverage and subsidizing insurance coverage through employers; (10) however, meeting the statutory requirements associated with these options has proven challenging, and some question whether their use at such an early point in program implementation would be consistent with the statute's focus on children's insurance coverage; (11) as of April 1, 1999, only Massachusetts and Wisconsin had received approval to use SCHIP funds to cover adults in families with children; (12) many states, including the 15 states in GAO's sample, are developing innovative outreach strategies to widely publicize SCHIP and to provide families with applications and program information; and (13) the states' strategies to avoid crowd out reflect the lack of consensus among states and researchers regarding the significance of crowd out and the availability of effective tools to deter the phenomenon.

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