Children's Health Insurance Program
The Children's Health Insurance Program, formerly known as the State Children's Health Insurance Program, is a program administered by the United States Department of Health and Human Services that provides matching funds to states for health insurance to families with children. The program was designed to cover uninsured children in families with incomes that are modest but too high to qualify for Medicaid. The program was passed into law as part of the Balanced Budget Act of 1997, and the statutory authority for CHIP is under title XXI of the Social Security Act.
CHIP was formulated in the aftermath of the failure of President Bill Clinton's comprehensive health care reform proposal. First Lady Hillary Clinton's brainchild in the aftermath of the failing of passage of her healthcare reform work, this Legislation to create CHIP was co-sponsored by Democratic senator Ted Kennedy and Republican senator Orrin Hatch. Despite opposition from some conservatives, SCHIP was included in the Balanced Budget Act of 1997, which President Clinton signed into law in August 1997. At the time of its creation, SCHIP represented the largest expansion of taxpayer-funded health insurance coverage for children in the U.S. since the establishment of Medicaid in 1965. The Children's Health Insurance Reauthorization Act of 2009 extended CHIP and expanded the program to cover an additional 4 million children and pregnant women, and the Bipartisan Budget Act of 2018 extended CHIP's authorization through 2027.
CHIP was designed as a federal-state partnership similar to Medicaid; programs are run by the individual states according to requirements set by the federal Centers for Medicare and Medicaid Services. States are given flexibility in designing their CHIP policies within broad federal guidelines, resulting in variations regarding eligibility, benefits, and administration across different states. Many states contract with private companies to administer some portions of their CHIP benefits. Some states have received authority to use CHIP funds to cover certain adults, including pregnant women and parents of children receiving benefits from both CHIP and Medicaid.
CHIP covered 7.7 million children during federal fiscal year 2010, and every state has an approved plan. Nonetheless, the number of uninsured children continued to rise after 1997, particularly among families that did not qualify for CHIP. An October 2007 study by the Vimo Research Group found that 68.7 percent of newly uninsured children were in families whose incomes were 200 percent of the federal poverty level or higher as more employers dropped dependents or dropped coverage altogether due to annual premiums nearly doubling between 2000 and 2006. A 2007 study from researchers at Brigham Young University and Arizona State found that children who drop out of CHIP cost their states more money due to the increased use of emergency care. A 2018 survey of the existing research noted that the availability of "CHIP coverage for children has led to improvements in access to health care and to improvements in health over both the short-run and the long-run."
History
The Children's Health Insurance Program grew out of years of work in the U.S. Congress to improve Americans' health coverage. Almost a decade prior, the U.S. Bipartisan Commission on Comprehensive Health Care was formed in 1989 and charged with recommending "legislative action to ensure coverage for all Americans." The commission, renamed the Pepper Commission in honor of its creator and first chair Representative Claude Pepper, laid out a blueprint to achieve universal coverage. Given the challenges of comprehensive health reform, Governor Jay Rockefeller, who was elected chair following Rep. Pepper's death, emphasized his commitment to pursue legislative action not only on the commission's full set of recommendations but also on a "down payment"—to expand public health coverage immediately for children and pregnant women, consistent with the principles the commission put forward. The legislation would guarantee public insurance coverage through Medicaid for every American child living in poverty and offset the cost of the improvements by doubling the federal excise tax on cigarettes.Quickly after his election in 1992, President Bill Clinton assembled a task force to write a comprehensive health reform bill, and he worked with Congress to introduce the Health Security Act in November 1993. It included provisions such as universal coverage and a basic benefit package, health insurance reform, and consumer choice of health plans.
After the HSA failed in the fall of 1994, congressional leaders and the administration recognized the need for an incremental, bipartisan approach to health care reform. Senator Jay Rockefeller continued to argue for expanded coverage for children. He referenced an amendment for accelerated coverage children and pregnant women offered during the Senate Finance Committee's health care reform markup that was adopted by a bipartisan majority of 12 to 8 as evidence that there was bipartisan support to provide assistance to children. He also went on to say expanding coverage for children was essential to reforming the welfare system to "prevent families from having to go and off welfare to qualify for Medicaid."
The 1996 Bipartisan Budget Agreement made net reductions in federal Medicaid spending over a five-year period but anticipated an additional $16 billion in spending on children's health care over the same period. However, it did not provide details on how that money would be spent. In 1997, several members of Congress introduced bills to cover uninsured children using that $16 billion, and the two most popular proposals were the Chafee-Rockefeller proposal and the Kennedy-Hatch proposal.
Senator Ted Kennedy, Chairman of the Senate Committee on Health, Education, Labor, and Pensions was intrigued by a children's health insurance plan in Massachusetts that had passed in 1996, and met with a Boston Medical Center pediatrics director and a Massachusetts state legislator to discuss the feasibility of a national initiative. Kennedy also saw using an increase in tobacco taxes as a way to pay for the expanded coverage. Thus, in October 1996, Kennedy introduced a bill to provide health care coverage for children of the working poor, to be financed via a 75 cents a pack cigarette tax increase.
Kennedy brought Republican Senator Orrin Hatch onto the legislation as a co-sponsor. Kennedy and Hatch had worked together as an "odd couple" in the Senate before, and here Hatch said that "Children are being terribly hurt and perhaps scarred for the rest of their lives" and that "as a nation, as a society, we have a moral responsibility" to provide coverage. Hatch's role would infuriate some Republican colleagues and conservative commentators.
On April 8, 1997, Senators Kennedy and Hatch introduced S. 525, the "Child Health Insurance and Lower Deficit Act. This legislation amended the Public Health Service Act to create a new grant program for states to purchase private health insurance for children. It proposed to raise $30 billion over 5 years by raising the tobacco tax with $20 billion going to expanded coverage for children under a block grant approach and $10 billion for deficit reduction. S. 525 was referred to the Senate Health Education Labor and Pensions Committee. Hearings were held on the bill in the HELP Committee but legislation to expand coverage for children was never acted on in the HELP Committee.
On April 30, 1997, Senators John Chafee and Jay Rockefeller introduced S. 674, a bill to amend title XIX of the Social Security Act "to expand health coverage of low income children and pregnant women and to provide funds to promote outreach efforts to enroll eligible children." On the same day, Representative John Dingell introduced an identical bipartisan companion bill in the House of Representatives with Republican cosponsor, Representative Margaret Scafati Roukema.
Meanwhile, in December 1996 First Lady Hillary Rodham Clinton examined several possible initiatives and decided expanding health care insurance to children who had none was the one to advance, especially as its focus on children would be politically popular. This had precedents from earlier in the Clinton administration: a different variant of this approach, dubbed "Kids First", had been envisioned as a backup plan during the original 1993 Task Force on National Health Care Reform meetings. Additionally, Hillary Clinton had discussed an SCHIP-like program with a White House health policy coordinator during the time her full-blown health care plan had suffered political failure.
The new initiative was proposed at Bill Clinton's January 1997 State of the Union address, with the stated goal of coverage up to five million children. Kennedy continued to write much of the bill, using the increase in tobacco taxes to pay the $20 billion price tag. In March 1997, Kennedy brought Republican Senator Orrin Hatch onto the legislation as co-sponsor; Kennedy and Hatch had worked together as an "odd couple" in the Senate before, and here Hatch said that "Children are being terribly hurt and perhaps scarred for the rest of their lives" and that "as a nation, as a society, we have a moral responsibility" to provide coverage. Hatch's role would infuriate some Republican colleagues and conservative commentators. The First Lady did not hold news conferences or testify before Congress on behalf of the bill.
An initial objection of Republicans in the Senate was that proposing to pay for the services by raising the federal tax on cigarettes, from 24 cents a pack to 67 cents a pack, ignored the likely consequence that sale of tobacco products would decrease and tax revenues would increasingly fall short of those needed to pay for the expansion of benefits. Kennedy and Hatch scoffed at the objection, with the former saying, "If we can keep people healthy and stop them from dying, I think most Americans would say 'Amen; isn't that a great result?' If fewer people smoke, states will save far more in lower health costs than they will lose in revenues from the cigarette tax." Republicans also criticized the bill as an open-ended entitlement program, although it was structured as a block grant rather than an entitlement; Senate Majority Leader Trent Lott was an early opponent of the measure, calling it a "big-government program" that would not pass.
Pressure was on to reduce the amount of grants involved, with $16 billion a possible compromise; Hillary Clinton instead argued for $24 billion. The Clinton administration had a deal with the Republican leadership in Congress that forbade the administration from backing any amendments to the budget resolution. On May 22, it was so done, with the necessary cigarette tax amendment defeated by a 55–45 margin. but Kennedy was surprised and angered by it, considering it a betrayal, and saying that his calls to Bill Clinton and Vice President Al Gore had not been returned. Hatch was also upset, saying that Lott may have been bluffing and that, "I think the President and the people in the White House caved here."
Kennedy did not give up on the measure, saying: "We shall offer it again and again until we prevail. It's more important to protect children than to protect the tobacco industry." Both Bill and Hillary Clinton argued for including the children's health insurance in subsequent legislation. The bill was indeed revived by Kennedy and Hatch a month after its initial defeat. Organizations from the Children's Defense Fund to the Girl Scouts of the USA lobbied for its passage, putting public pressure on Congress; Kennedy urged Clinton to use her influence within the White House. SCHIP was then passed and signed into law by Bill Clinton on August 5, 1997, as part of the Balanced Budget Act of 1997, to take effect the following month. At a press conference following the signing, Kennedy thanked Hatch, Senate Minority Leader Tom Daschle, Children's Defense Fund head Marian Wright Edelman, Bill Clinton, and Hillary Clinton. About the last, Kennedy said, "Mrs. Clinton... was of invaluable help, both in the fashioning and the shaping of the program and also as a clear advocate."
CHIP is located at Title IV, subtitle J of H.R. 2015 Balanced Budget Act of 1997. H.R. 2015 was introduced and sponsored by Rep John Kasich with no cosponsors. On 25 June 1997, H.R. 2015 passed House Vote Roll #241 mainly among partisan lines, 270 ayes and 162 nays, with most Democrats in the House of Representatives in opposition.
On the same day, the bill passed in the Senate, with a substitute amendment, by unanimous consent. After a conference between the House and Senate, passage in both House and Senate on the conference substitute became more bipartisan.