Federal Financing for the State Children's Health Insurance Program (CHIP) Page: 4 of 16
The following text was automatically extracted from the image on this page using optical character recognition software:
Federal Financing for the State Children's Health Insurance Program (CHIP)
The State Children's Health Insurance Program (CHIP) is a federal-state program that provides
health coverage to certain uninsured, low-income children and pregnant women in families that
have annual income above Medicaid eligibility levels but do not have health insurance.' CHIP is
jointly financed by the federal government and the states and is administered by the states.
Participation in CHIP is voluntary, and all states, the District of Columbia, and the territories
participate.2 The federal government sets basic requirements for CHIP, but states have the
flexibility to design their own version of CHIP within the federal government's basic framework.
As a result, there is significant variation across CHIP programs.
States may design their CHIP programs in one of three ways: a CHIP Medicaid expansion, a
separate CHIP program, or a combination approach in which the state operates a CHIP Medicaid
expansion and one or more separate CHIP programs concurrently. CHIP benefit coverage and
cost-sharing rules depend on program design. CHIP Medicaid expansions must follow the federal
Medicaid rules for benefits and cost sharing. For separate CHIP programs, the benefits are
permitted to look more like private health insurance, and states may impose cost sharing, such as
premiums or enrollment fees, with a maximum allowable amount that is tied to annual family
FY2017 is the last year federal CHIP funding has been appropriated in statute. States are expected
to have federal CHIP spending in FY2018 because states will have access to unspent funds from
their FY2017 allotments and to unspent FY2016 allotments redistributed to shortfall states (if
any). However, the Patient Protection and Affordable Care Act's (ACA's; P.L. 111-148, as
amended) maintenance of effort (MOE) provision requires states to maintain income eligibility
levels for CHIP children through September 30, 2019, as a condition for receiving federal
Medicaid payments (notwithstanding the lack of corresponding federal CHIP appropriations for
FY2018 and FY2019).3
This report provides an overview of CHIP financing, beginning with an explanation of the federal
matching rate. It describes various aspects of federal CHIP funding, such as the federal
appropriation, state allotments, the Child Enrollment Contingency Fund, redistribution funds, and
outreach and enrollment grants. The report ends with a section about the future of CHIP funding,
including the options for extending CHIP funding and what could happen if federal funding
Federal Matching Rate
The federal government's share of CHIP expenditures (including both services and
administration) is determined by the enhanced federal medical assistance percentage (E-FMAP)
rate. The E-FMAP rate is based on the FMAP rate, which is the federal matching rate for the
Medicaid program. The FMAP formula compares each state's average per capita income with
1 For more information about the State Children's Health Insurance Program (CHIP), see CRS Report R43627, State
Children 's Health Insurance Program: An Overview, by Evelyne P. Baumrucker and Alison Mitchell.
2 The five territories are American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, Puerto Rico,
and the Virgin Islands.
3 For more information about the impact of the Patient Protection and Affordable Care Act's (ACA's) child
maintenance of effort (MOE) provision on CHIP, see CRS Report R43909, CHIP and the ACA Maintenance of Effort
(MOE) Requirement: In Brief, by Alison Mitchell and Evelyne P. Baumrucker.
Congressional Research Service
Here’s what’s next.
This report can be searched. Note: Results may vary based on the legibility of text within the document.
Tools / Downloads
Get a copy of this page or view the extracted text.
Citing and Sharing
Basic information for referencing this web page. We also provide extended guidance on usage rights, references, copying or embedding.
Reference the current page of this Report.
Mitchell, Alison. Federal Financing for the State Children's Health Insurance Program (CHIP), report, September 29, 2017; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc1042336/m1/4/: accessed April 24, 2019), University of North Texas Libraries, Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.