The Children’s Health Insurance Program

A 50-state examination of CHIP spending and enrollment

Report October 21, 2014 Read time:

Projects: State Health Care Spending

In July 2015, this report was updated to include revised data for Table B.2.

The Children’s Health Insurance Program, a joint state-federal partnership, covered 8.1 million children at a cost of more than $13 billion in 2013. Since the program’s inception in 1997, CHIP has been administered in every state to provide health insurance to children who don’t qualify for Medicaid or have access to other forms of insurance. Further, CHIP has been instrumental in reducing the number of uninsured children nationally—from 10.7 million, or 15 percent of all children, in 1997, to 6.6 million, or 9 percent, in 2012.

To better understand CHIP’s effect in the states, this report examines key facets of CHIP and how it is administered, analyzing spending and enrollment data for the 50 states and the District of Columbia. To place CHIP spending and enrollment in context, this report also analyzes factors driving program variation among states, the landscape of children’s health insurance, and the ways CHIP will change with implementation of the Affordable Care Act.

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Key Findings

PROGRAM SPENDING INCREASES

5.5% growth in Children’s Health Insurance Program (CHIP) spending nationwide from 2005-12

Total CHIP spending, including federal and state dollars, increased from $8.4 billion in 2005 to $12.2 billion in 2012, equating to an inflation-adjusted compound annual growth rate of 5.5 percent, which was more than double that of overall national health expenditures. This figure amounts to a cumulative growth of 45 percent. During the same time period, CHIP enrollment grew by a factor of 32 percent.

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MORE CHILDREN COVERED

2 million increase in Children’s Health Insurance Program (CHIP) enrollment from 2005-12

Because CHIP is not an entitlement program—states are not required to cover all individuals who meet eligibility criteria—some states adopted policies to intentionally keep their CHIP enrollment flat. In contrast, other states have tried to maximize enrollment through broader eligibility criteria or enhanced outreach efforts. In an effort to reduce the burden on applicants, some states are also simplifying procedures for enrollment and reenrollment by, for example, allowing continuous eligibility and automatic renewals.

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CHIP SPENDING LOW COMPARED WITH OTHER INSURANCE OPTIONS

40% lower cost per child of CHIP over employer-sponsored insurance and Medicaid

Children’s health care needs can vary among the insurance programs. For example, in some states, Medicaid enrolls most seriously disabled children regardless of parental income, making it the primary insurer for these high-cost enrollees, which in turn drives up spending per child enrolled. CHIP and Medicaid must provide comprehensive children’s health insurance benefits, including screening services; vision, hearing, and dental services; and medically necessary services to treat or ameliorate any illness.

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OVERVIEW

Millions of children in the United States lack health insurance. Research shows that these uninsured children are far less likely to receive medical care than are their peers with health insurance. They have more avoidable hospitalizations and worse asthma outcomes, and they are at higher risk of having truancy problems.

The Children’s Health Insurance Program (CHIP) was created in 1997 as a federal-state partnership administered by every state to provide health insurance to those children who neither qualify for Medicaid nor have access to other forms of insurance.

In fiscal year 2013, CHIP covered 8.1 million children at a total cost of more than $13 billion. And since its inception, the program has been instrumental in reducing the number of uninsured children nationally from 10.7 million (15 percent of all children) in 1997 to 6.6 million (9 percent) in 2012.

To provide policymakers and other stakeholders with a better understanding of CHIP's impact in the states, researchers from the State Health Care Spending Project—a collaborative effort of The Pew Charitable Trusts and the John D. and Catherine T. MacArthur Foundation—examined key facets of the program and how it is administered, analyzing data on CHIP spending and enrollment for the 50 states and the District of Columbia. To place such data in context, this report also examined data on other insurance coverage and spending, state revenue, and overall national health expenditures.^*

By design, CHIP gives states flexibility in how they structure their programs and spend their designated dollars to extend health insurance to uninsured children. As a result, the implementation of the program varies widely among the states. The data on CHIP that are examined in this report show:

Differences persist among states in spending, percentage of children enrolled, and enrollment trends over time.
Nationwide, program spending grew by 5.5 percent from 2005 to 2012—more than double the rate of overall national health expenditures (2.7 percent).^†
During the same period, enrollment grew by 2 million, or 32 percent.
Growth in CHIP spending ranged across states from a 27.2 percent annual decrease to a 27.2 percent increase between 2005 and 2012.
CHIP spending is low compared with other types of insurance, costing approximately 40 percent less per child than employer-sponsored insurance and Medicaid in 2010, the last year for which data were available across all insurance types.

The landscape of children’s health insurance and the role of CHIP will change because of the ongoing implementation of the Affordable Care Act, which provides other methods for children to receive health insurance and thus could reduce the number of CHIP enrollees. In addition, the act only funds CHIP through Oct. 1, 2015; if Congress continues the program beyond that date, funding will shift, with contributions from states reduced and the contribution from the federal government increased. Eligibility levels would remain the same for at least four years, because the act requires states to cover children at current income eligibility standards until 2019.

^* Overall national health expenditures include spending on public and private health insurance, as well as individuals’ out-of-pocket costs.
^† These numbers represent the compound annual growth rate and are adjusted for inflation.

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