Providing health insurance coverage to children has been a pressing policy issue for decades. The Social Security Act Amendments of 1965 (P.L. 89-97) enacted Medicare (Title XVIII of the Social Security Act), the coverage program for the elderly, and Medicaid (Title XIX of the Social Security Act), the coverage program for the poor, including families with children and the aged, blind, or disabled. Before this legislation, health care services for the poor were provided through a patchwork of public programs, charities, and community hospitals (Kaiser Commission on Medicaid and the Uninsured 2011).8 From its inception, Medicaid coverage was tied to receipt of Aid to Families with Dependent Children (AFDC), the nation’s welfare program. AFDC recipients were automatically entitled to Medicaid benefits.
The growing number of uninsured, low-income children throughout the 1970s and early 1980s led to reforms of the Medicaid program so that more children would be covered. Beginning with the Deficit Reduction Act of 1984 (P.L. 98-369), Congress passed a series of expansions throughout the decade that permitted states to offer Medicaid coverage to additional groups, including certain pregnant women, infants, and children under age 6 up to specified incomes, among others (Kaiser Commission on Medicaid and the Uninsured 2011). Still, the gap in coverage for children continued to widen: by 1987, nearly one-quarter (24 percent) of children in families with family income under 100 percent of the FPL were uninsured, compared with less than 5 percent of children with family incomes greater than 200 percent of the FPL (Centers for Disease Control 1987). In 1990, the Omnibus Budget Reconciliation Act (OBRA 90) (PL 101-508) sought to address this problem, expanding Medicaid coverage to all children ages 6 to 18 with family income below 100 percent of the FPL, starting with the youngest and phasing in another age level each year until 2002, when all 18-year-olds became eligible. By 1997, the effects of the OBRA 90 legislation were apparent: 11 percent of children with income less than 100 percent of the FPL were uninsured (Agency for Health Care Research 1997; Cunningham and Kirby 2004).
It was also in the 1990s that a previously overlooked trend became evident: the growing number of uninsured children with incomes above 100 percent of the FPL. Between 1977 and 1997, the percentage of children with family incomes between 100 and 200 percent of the FPL who were uninsured increased from 13.0 to 19.5 percent, due largely to declines in private insurance coverage (Cunningham and Kirby 2004). Although attempts at national health care reform had failed in 1994, there was support from Congressional leaders of both political parties to craft legislation that would help children who fell into this coverage gap. The State Children’s Health Insurance Program (previously known as SCHIP, now called CHIP) passed with bipartisan support as part of the Balanced Budget Act of 1997 and became law on August 5, 1997, as Title XXI of the Social Security Act (P.L. 105-33).9 Congress appropriated $40 billion to support CHIP’s first 10 years (FFYs 1998 through 2007) (Wooldridge et al. 2003).
8 For example, Title V of the Social Security Act of 1935 provided services for mothers, infants, and children, although this was not a “coverage” program. This was the predecessor program to what is now known as the Maternal and Child Health Services block grant program.
9 CHIPRA renamed the program the Children’s Health Insurance Program (CHIP); for clarity we use the CHIP acronym throughout the report.