State Children's Health Insurance Program (SCHIP) Information

The State Children's Health Insurance Program (SCHIP) is jointly financed by the Federal and State governments and is administered by the States.  Following Federal guidelines, each of the States designs their own program, determine eligibility groups, defines benefit packages, payment levels for coverage, and administrative and operating procedures.  The original SCHIP provided a capped amount of funds to States on a matching basis for Federal fiscal years (FY) 1998 through 2007.  Federal payments under title XXI to States are based on State expenditures under approved plans effective on or after October 1, 1997.

Between 1997 and 2007, 7 million children were covered by SCHIP and millions more gained coverage through Medicaid. As a result, the uninsured rate among children, especially low-income children, dropped from 23 percent in 1997 to 15 percent in 2006.

Even though there were successes with the program, SCHIP needed to be strengthened. Several states, including New Jersey, were running out of the money they needed to keep their programs running. This was because the program never had enough money to begin with. Even if you didn't enroll a single additional child, the cost of simply maintaining the program would continue to increase because of the large increases in health care costs.

The goal of SCHIP is not to discourage states from enrolling uninsured children. The goal is to provide health coverage to as many uninsured children as possible. One problem is that there are too many children who are eligible for SCHIP and Medicaid but they are not enrolled. In order to address these problems, President Barack Obama signed a bill into law that will provide states with the stable funding levels they need to maintain and expand their programs.

Premium assistance programs provide financial assistance for people to purchase insurance policies within the private market. However, it has been demonstrated that it is more cost-effective to simply provide coverage through SCHIP or Medicaid than through private insurance policies. Medicaid and SCHIP serve a vulnerable population that suffers from unique health needs, which private insurance policies often fail to provide coverage for. On April 1, 2009, the federal tax on cigarettes will go from 39 cents per pack to $1.01. All the extra tax money is supposed to help fund the State Children's Health Insurance Plan, or SCHIP.