	Introduction

The State Children's Health Insurance Program (CHIP) is a federal-state program that provides health coverage to certain uninsured low-income children and pregnant women in families that have annual income above Medicaid eligibility levels, but have no health insurance. CHIP is jointly financed by the federal government and states, and the states are responsible for administering CHIP. The federal government sets basic requirements for CHIP, but states have the flexibility to design their own version of CHIP within the federal government's basic framework. As a result, there is significant variation across CHIP programs. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended) largely maintains the current CHIP structure through FY2019. On April 16, 2015, President Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA; P.L. 114-10 ). MACRA repeals the sustainable growth rate (SGR) mechanism (which overrides the reduction in the Medicare physician fee schedule that was set to begin in April 2015) and extends funding for CHIP, among other provisions. Specifically, MACRA extends CHIP funding for two additional years (i.e., through FY2017) and maintains the current allotment formula with the 23 percentage point increase to the enhanced federal medical assistance percentage (E-FMAP). MACRA also extends the "qualifying state" option, the Child Enrollment Contingency Fund, "Express Lane" eligibility, Outreach and Enrollment Grants, the Pediatric Quality Measures Program, and the Childhood Obesity Demonstration Project. Congress will face a decision with regard to the future of CHIP when federal CHIP funding expires after FY2017. Congress's action or inaction on the CHIP program will affect the health insurance options available to targeted low-income children and their resulting health coverage. This report describes the basic elements of CHIP, focusing on how the program is designed, who is eligible, what services are covered, how enrollees share in the cost of care, and how the program is financed. The report ends with a brief discussion of the future of CHIP. Program Design

States may design their CHIP programs in three ways. They may cover eligible children under their Medicaid programs (i.e., CHIP Medicaid expansion), create a separate CHIP program, or adopt a combination approach where the state operates a CHIP Medicaid expansion and one or more separate CHIP programs concurrently. This provision is often referred to as the ACA Maintenance of Effort (MOE) requirement. Upper Income Eligibility Levels in CHIP

Statewide upper income eligibility thresholds for CHIP-funded child coverage vary substantially across states, ranging from a low of 175% FPL to a high of 405% FPL. EPSDT sets Medicaid benefit coverage for children (including CHIP children) apart from other sources of health insurance in that it permits coverage of all services listed in Medicaid statute (regardless of whether a given benefit is covered in the state plan) and it effectively eliminates any state-defined limits on the amount, duration, and scope of this benefit. Separate CHIP Programs

If a state implements a separate CHIP program, premiums or enrollment fees may be imposed for program participation, but the maximum allowable amount is dependent on annual family income. The federal government reimburses states for a portion of every dollar they spend on CHIP (for both CHIP Medicaid expansions and separate CHIP programs) up to state-specific limits called allotments. In FY2013, CHIP expenditures totaled $13.2 billion. The federal share totaled $9.2 billion and the state share was $4.0 billion. If Congress takes no action and CHIP funding runs out, states need to adhere to the MOE requirements that are in effect through FY2019. The MOE requires states to maintain income eligibility levels for CHIP children through September 30, 2019, as a condition for receiving Medicaid payments (notwithstanding the lack of corresponding federal CHIP appropriations for FY2016 through FY2019). The MOE requirements impact CHIP Medicaid expansion programs and separate CHIP programs differently. For CHIP Medicaid expansion programs , when federal CHIP funding is exhausted, the CHIP-eligible children in these programs continue to be enrolled in Medicaid but financing switches from CHIP to Medicaid. For separate CHIP programs , states are provided a couple of exceptions to the MOE: (1) after September 1, 2015, states may enroll CHIP-eligible children into qualified health plans in the health insurance exchanges or (2) states may impose waiting lists or enrollment caps in order to limit CHIP expenditures. In addition, in the event that a state's CHIP allotment is insufficient to fund CHIP coverage for all eligible children, a state must establish procedures to screen children for Medicaid eligibility, and enroll those who are Medicaid-eligible. For children not eligible for Medicaid, the state must establish procedures to enroll CHIP children in qualified health plans in the health insurance exchanges that have been certified by the HHS Secretary. If no additional federal CHIP appropriations are provided, CHIP children in CHIP Medicaid expansion programs (roughly half of CHIP enrollees) would continue to receive coverage through the Medicaid program through FY2019, but coverage of CHIP children in separate CHIP programs (roughly half of CHIP enrollees) who are not eligible for Medicaid is reliant on whether the children have access to qualified health plans that are certified by the HHS Secretary.
The State Children's Health Insurance Program (CHIP) is a means-tested program that provides health coverage to targeted low-income children and pregnant women in families that have annual income above Medicaid eligibility levels but have no health insurance. CHIP is jointly financed by the federal government and states, and the states are responsible for administering CHIP. In FY2013, CHIP enrollment totaled 8.4 million individuals and CHIP expenditures totaled $13.2 billion.
Under the CHIP program, the federal government sets basic requirements for CHIP, but states have the flexibility to design their own version of CHIP within the federal government's basic framework. As a result, there is significant variation across CHIP programs. Currently, state upper-income eligibility limits for children range from a low of 175% of the federal poverty level (FPL) to a high of 405% of FPL. States may also extend CHIP coverage to pregnant women when certain conditions are met.
States may design their CHIP programs in three ways: a CHIP Medicaid expansion, a separate CHIP program, or a combination approach where the state operates a CHIP Medicaid expansion and one or more separate CHIP programs concurrently. CHIP benefit coverage and cost-sharing rules depend on program design. CHIP Medicaid expansions must follow the federal Medicaid rules for benefits and cost sharing, which entitles CHIP enrollees to Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) coverage (effectively eliminating any state-defined limits on the amount, duration, and scope of any benefit listed in Medicaid statute) and exempts the majority of children from any cost sharing. For separate CHIP programs, the benefits are permitted to look more like private health insurance, and states may impose cost sharing, such as premiums or enrollment fees, with a maximum allowable amount that is tied to annual family income.
The federal government reimburses states for a portion of every dollar they spend on CHIP (including both CHIP Medicaid expansions and separate CHIP programs) up to state-specific annual limits called allotments. The federal share of FY2013 total expenditures was $9.2 billion and the state share was $4.0 billion.
CHIP was enacted in 1997. Since that time, Congress has extended federal CHIP funding. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) extended CHIP funding through FY2015. On April 16, 2015, President Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA; P.L. 114-10). MACRA repeals the sustainable growth rate (SGR) mechanism (which overrides the reduction in the Medicare physician fee schedule that was set to begin in April 2015) and extends funding for CHIP, among other provisions. Specifically, MACRA extends CHIP funding for two additional years (i.e., through FY2017) and maintains the current allotment formula, including a 23 percentage point increase to the enhanced federal medical assistance percentage (E-FMAP). MACRA also extends the "qualifying state" option, the Child Enrollment Contingency Fund, "Express Lane" eligibility, Outreach and Enrollment Grants, the Pediatric Quality Measures Program, and the Childhood Obesity Demonstration Project.
Although MACRA adds two additional years to federal funding for CHIP (through FY2017), states still need to adhere to the ACA's maintenance of effort (MOE) requirements that are in effect through FY2019. The MOE requires states to maintain income eligibility levels for CHIP children through September 30, 2019, as a condition for receiving federal Medicaid payments (notwithstanding the lack of corresponding federal CHIP appropriations for FY2018 and FY2019). The MOE requirements impact CHIP Medicaid expansion programs and separate CHIP programs differently.
For CHIP Medicaid expansion programs, when federal CHIP funding is exhausted, the CHIP-eligible children in these programs continue to be enrolled in Medicaid but financing switches from CHIP to Medicaid. For separate CHIP programs, states are provided a couple of exceptions to the MOE: (1) after September 1, 2015, states may enroll CHIP-eligible children into qualified health plans in the health insurance exchanges or (2) states may impose waiting lists or enrollment caps in order to limit CHIP expenditures. In addition, in the event that a state's CHIP allotment is insufficient to fund CHIP coverage for all eligible children, a state must establish procedures to screen children for Medicaid eligibility, and enroll those who are Medicaid-eligible. For children not eligible for Medicaid, the state must establish procedures to enroll CHIP children in qualified health plans in the health insurance exchanges that have been certified by the Secretary of Health and Human Services (HHS) to be "at least comparable" to CHIP in terms of benefits and cost sharing.
Congress will face a decision with regard to the future of CHIP when federal CHIP funding expires after FY2017. If Congress does not act and federal CHIP funding ends, some CHIP enrollees likely would continue to have coverage through Medicaid as a result of the MOE requirements, but others would need to find another source of health insurance coverage (e.g., employer-sponsored health insurance or through the health insurance exchanges), and some likely would be uninsured. Congress's action or inaction on the CHIP program may affect health insurance options and resulting coverage for targeted low-income children that are eligible for the current CHIP program.
This report describes the basic elements of CHIP, focusing on how the program is designed, who is eligible, what services are covered, how enrollees share in the cost of care, and how the program is financed. The report ends with a brief discussion of the future of CHIP.