Interim Evaluation Report: Congressionally Mandated Evaluation of the State Children’s Health Insurance Program. A. Policy Development and Program Characteristics

02/26/2003

The legislation that established SCHIP made available approximately $40 billion in federal funds to states for fiscal years 1998 through 2007. From FY 1998 to FY 2001, states had access to slightly more than $4 billion per year. 72 (States were allowed to spend a given year's fiscal funds over the 3-year period.) State allotments are derived from a formula based primarily on two factors: (1) the number of low-income, uninsured children in the state, and (2) the number of low-income children in the state. Health care costs in the state relative to those of other states are also part of the allotment formula. States that exceed their allotment in the 3-year period of availability may draw on other states' unspent allotments. 73

Because the criteria for state selection for the evaluation favored larger states, the allotments available to the six study states, shown in Table 19, tended to be larger than the national median. Due to the large estimates of uninsured children in California, Texas, and New York, these states received the first, second, and fourth largest allotments in the country; Louisiana received the tenth largest amount. Colorado and Missouri received allotment amounts close to the national median. Altogether, the six study states received 44.2 percent of the total federal funds allocated for SCHIP.

States receive an enhanced Federal Medical Assistance Percentage (FMAP) for SCHIP relative to the FMAP provided under Medicaid. 74 Thus, from the start, SCHIP has been a financially attractive program for the states. As shown in Table 20, SCHIP federal matching rates for the six study states ranged from 65 to 79.4 percent.

TABLE 19: 
SCHIP ALLOTMENTS AND EXPENDITURES, IN MILLIONS, 1998-2001
State FFY Federal Allotment Expenditures Expenditures as % of Allotment Redistributed Allocations
California 1998 $854.6 $2.0 0%  
  1999 $850.6 $67.7 8%  
  2000 $765.5 $187.3 25% 0
  2001 $704.9 $311.4 44% 0
Colorado 1998 $41.8 $ 1.0 2%  
  1999 $41.6 $ 9.0 22%  
  2000 $46.9 $13.9 30% 0
  2001 $44.6 $20.9 47% 0
Louisiana 1998 $101.7      
  1999 $101.3 $10.4 10%  
  2000 $91.1 $25.3 28% 0
  2001 $82.0 $39.7 48% 0
Missouri 1998 $51.7     $9.2
  1999 $51.4 $19.7 38% $61.8
  2000 $58.0 $41.2 71% $9.2
  2001 $65.5 $52.3 80% $9.2
New York 1998 $255.6 $50.1 20% $197.5
  1999 $254.4 $239.4 94% $129.8
  2000 $286.8 $401.0 140% $434.9
  2001 $322.0 $343.8 107% $197.5
Texas 1998 $561.3 $1.3 0%  
  1999 $558.7 $38.5 7%  
  2000 $502.8 $41.5 8% 0
  2001 $452.5 $264.0 58% 0

Notes: The percentages of 1999 and 2000 allotments spent do not take into account redistributed amounts; states have several options as to when they use these funds. 
FFY 2002 federal allotments were as follows: California: $704.9; Colorado: $44.6; Louisiana: $82.0; Missouri: $65.5; New York: $322.0; Texas: $452.5 (Federal Register Notice, January 22, 2001.)

SCHIP = State Children's Health Insurance Program (Title XXI); FFY = federal fiscal year.

Source: Centers for Medicare & Medicaid Services (CMS), Memo from Center for Medicaid and State Operations to State, January 25, 2000; Federal Register Notice, June 21, 2001; Kenney et al., Three Years into SCHIP: What States Are and Are Not Spending, The Urban Institute, September 2000. CMS provided figures for 2000 and 2001 to authors.


TABLE 20: 
FEDERAL MATCHING RATE AND SOURCES OF STATE SHARES
State Federal Matching Rate for Medicaid (FY 2002) Enhanced Federal Matching Rate for SCHIP (FY 2002) Sources of State Matching SCHIP Share
California 51.40% 65.98% State appropriations
Colorado 50.00% 65.00% State appropriations
Louisiana 70.30% 79.21% Until 1999, foundation grants and school board funds. Since then, tobacco settlement funds and state appropriations
Missouri 61.06% 72.74% State appropriations and, since 2001, tobacco settlement funds
New York 50.00% 65.00% State appropriations
Texas 60.17% 72.12% Tobacco settlement funds

Source: Federal Register, vol. 65, no. 223, November 17, 2000.


State expenditures under SCHIP are matched with federal funds. To obtain this federal match, the study states used primarily two sources for funding--state appropriations and tobacco settlement funds (Table 20). Five states use general state appropriation monies; three draw on tobacco settlement funds, and some use both. The tobacco settlement in Texas--the largest in the nation--was the only source used to fundTexCare each year.


72. The President's budget for FY 2003 would extend the availability of FY 1998, FY 1999 and FY 2000 SCHIP funds until the end of FY 2006.

73. Cited in Kenney et al., Three Years into SCHIP: What States Are and Are Not Spending. The Urban Institute, September 2000.

74. Specifically, the state share of SCHIP costs was established at 70 percent of what states pay under Medicaid.

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