State Children's Health Insurance Program

The State Children's Health Insurance Program (SCHIP) – later known more simply as the Children's Health Insurance Program (CHIP) – 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.

At its creation in 1997, SCHIP was the largest expansion of taxpayer-funded health insurance coverage for children in the U.S. since Medicaid began in the 1960s. The statutory authority for SCHIP is under title XXI of the Social Security Act. It was sponsored by Senator Edward Kennedy in a partnership with Senator Orrin Hatch with support coming from First Lady Hillary Rodham Clinton during the Clinton administration.

States are given flexibility in designing their SCHIP eligibility requirements and policies within broad federal guidelines. Some states have received authority through waivers of statutory provisions to use SCHIP funds to cover the parents of children receiving benefits from both SCHIP and Medicaid, pregnant women, and other adults. SCHIP covered 6.6 million children and 670,000 adults at some point during federal fiscal year 2006, and every state, except Arizona has an approved plan. Despite SCHIP, the number of uninsured children continued to rise, particularly among families that cannot qualify for SCHIP. 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. Vimo cites the Kaiser Commission on Medicaid and the Uninsured when it says 48 percent of the newly uninsured were not eligible for any kind of public coverage, and that only those in the lowest income bracket might offset the loss of employer-sponsored coverage with increases in Medicaid and SCHIP. In FY 2008, the program faced funding shortfalls in several states.

During the administration of George W. Bush, two attempts to expand funding for the program failed when President Bush vetoed them. Mr. Bush argued that such efforts were steps toward federalization of health care, and would "steer the program away from its core purpose of providing insurance for poor children and toward covering children from middle-class families." On February 4, 2009, President Barack Obama signed the Children's Health Insurance Reauthorization Act of 2009, expanding the healthcare program to an additional 4 million children and pregnant women, including for the first time legal immigrants without a waiting period.