The Congress created SCHIP in 1997 as a means of providing health  benefits coverage to children living in families whose incomes exceed the  eligibility limits for Medicaid. In addition, families may need to  apply to both Medicaid and SCHIP to obtain health care coverage for all of  their children because Medicaid eligibility standards can vary according to  the age of the child. While Similarities Often Exist, Enrollment Differences Can Affect Ability to Obtain and Keep Coverage

Differences in Medicaid and SCHIP enrollment requirements—particularly  application requirements and eligibility determination practices—can  affect beneficiaries’ ability to obtain and keep coverage. To help simplify  the process for applicants, 8 of the 10 states we reviewed used joint  applications that had similar—but not always identical—requirements for  Medicaid and SCHIP applicants. When application requirements differed,  Medicaid applicants had to provide additional information or  documentation. However, different application  requirements for Medicaid and SCHIP, as well as poor coordination  between the programs could delay coverage for families. Health Plan and Physician Participation, and Payment Differences Can Affect Access to Care

Differences in the plans and physicians that participate in Medicaid and  SCHIP and in payments the programs make to these plans and physicians  have implications for beneficiaries’ choices and access to care. In the 10  states we reviewed, SCHIP often required enrollees to join a managed care  plan and sometimes did not provide a choice of plans. In contrast,  Medicaid beneficiaries had a choice of at least two capitated plans in  locations offering managed care or could receive care on a FFS basis,  including through PCCM. However, having such choices did not  necessarily mean greater access to providers. Similarly, one program may have a number of  smaller plans, while larger plans with more extensive provider networks  may not participate in the program. Medicaid’s capitation rate included both adults and children, while SCHIP’s  rate was limited to children. States’ Design Choices Under SCHIP

States are allowed three options in designing SCHIP:  expand their  Medicaid program, develop a separate child health program that functions  independently of the Medicaid program, or combine both approaches.
What GAO Found

States provide health care coverage to low-income uninsured children largely through two federal-state programs--Medicaid and the State Children's Health Insurance Program (SCHIP). Medicaid was established in 1965 to provide health care coverage to low-income adults and children. Medicaid expenditures for health services to 22.3 million children totaled $32.4 billion in 1998. Congress established SCHIP in 1997 to provide health care coverage to children living in poor families whose incomes exceed the eligibility requirements for Medicaid. SCHIP expenditures for health services to nearly 2 million children totaled $2 billion in 1999. In implementing SCHIP, states could opt to expand their Medicaid programs or establish a separate child health program distinct from Medicaid that uses specified public or private insurance plans offering a minimum benefit package. Thirty-five states have chosen SCHIP approaches that are, to varying degrees, separate from their Medicaid programs. Because eligibility for Medicaid and SCHIP can vary with a child's age, children may, at different ages, need to move from one program to the other. Access to care, therefore, is affected by the extent to which health plans and providers are available and participate in Medicaid and SCHIP. Differences in Medicaid and SCHIP enrollment requirements--particularly application requirements and eligibility determination practices--can affect beneficiaries' ability to obtain and keep coverage. To help simplify the process for applicants, eight of the 10 states GAO reviewed used joint applications that had similar--but not always identical--requirements for Medicaid and SCHIP applicants. When application requirements differed, Medicaid applicants had to provide additional information or documentation, such as proof of income or assets, or participate in interviews. Differences in the health plans and providers that participate in Medicaid and SCHIP, as well as differences in the payments they receive, have implications for beneficiaries' access to care. In the 10 states GAO reviewed, SCHIP often required enrollees to join a managed care plan and sometimes did not offer a choice of plans, while Medicaid offered families a choice of two or more plans or of care on a fee-for-service basis, including primary care case management. However, such choices did not necessarily give beneficiaries greater access to providers because plan choices may be limited to several smaller plans and may exclude larger plans with more extensive networks.