Some states expressed interest early on in adopting strategies that would allow them to cover low-income parents as well as children under SCHIP, or that would allow them to leverage employer-based and other insurance packages available to some families by subsidizing the cost of such coverage. Although CMS did not allow parent coverage waivers during the program's first two years, the agency issued guidance in July 2000 that clarified the conditions under which it would grant approval of state applications to test such strategies. Different rules govern applications for premium assistance programs. The initial regulations governing premium assistance programs reportedly posed barriers for many states.
At the time this report was prepared, eight states nationally had been given approval to cover low-income parents under SCHIP (California, Arizona, Illinois, Minnesota, New Jersey, Oregon, Rhode Island, and Wisconsin), and seven states had received approval to use SCHIP funds to support premium assistance programs (Maryland, Massachusetts, Mississippi, New Jersey, Virginia, Wisconsin, and Wyoming) (Rosenbach et al. 2002).
In 2001, the Administration formulated a new approach for states seeking to obtain Section 1115 waivers for Medicaid and SCHIP--the Health Insurance Flexibility and Accountability (HIFA) demonstration initiative. Federal officials expect that states will, in the future, use HIFA authority when requesting SCHIP waivers to expand health insurance coverage to low income parents and/or create premium assistance programs. The primary goal of the HIFA demonstration initiative is to encourage new comprehensive state approaches to increase the number of low-income individuals who have health insurance coverage, without increasing resources spent on Medicaid and SCHIP. HIFA encourages innovative programs that coordinate public and private health insurance coverage options. HIFA provides for a simpler demonstration application process for states that commit to reducing the number of people without health insurance. (Of the states authorized to cover parents (Arizona, California, Illinois, New Jersey, and New Mexico), Arizona, Illinois, and Oregon have taken advantage of the initiative.)