The BBA of 1997 also brought about a major change in public health insurance coverage for children by creating the Children’s Health Insurance Program (CHIP), which was initially authorized and appropriated through 2007, subsequently extended in 2009. With joint federal-state funding, states are allowed to set up a program to enroll children from families with higher income levels than Medicaid into public health insurance. States may expand the Medicaid program they already have in place, create a separate CHIP program, or have a combination of both approaches. This choice affects the states’ options in terms of program administration, required benefits that must be offered, eligibility, documentation requirements for enrollees, and cost sharing. States choosing to run Medicaid expansion programs with their CHIP funding are subject to federal Medicaid rules; separate CHIP programs are subject to somewhat different federal CHIP rules. In addition, states with separate programs may cap enrollment in CHIP, while Medicaid expansion programs cannot. Finally, states received an enhanced matching rate for CHIP expenditures when compared to the Medicaid match.
Because CHIP was implemented at about the same time that risk-based managed care was being expanded widely for Medicaid-enrolled children, many states chose to use risk-based managed care as the dominant delivery model for their CHIP programs as well (Hill, Harrington, Bajaj, Black, Fasciano, Howell, et al., 2003). However, there has been little study of how managed care programs operate under CHIP.
The CHIP program was reauthorized through the Children's Health Insurance Program Reauthorization Act (CHIPRA) in 2009 and appropriated through 2015. Before CHIPRA, there was less federal oversight of CHIP risk-based managed care programs than for Medicaid. The 2009 legislation, however, brought the federal requirements of the two programs closer together by mandating, for example, the use of EQROs, a choice of MCOs, and a uniform core set of voluntary performance measures. However, some differences remain between federal Medicaid and CHIP managed care program requirements. For example, there is no mandate that capitation rates be actuarially sound under CHIP.