SCHIP at the Crossroads: California’s Options in Responding to New Federal Funding Conditions

Authors: Peter Harbage and Hilary Haycock

Prepared for the California HealthCare Foundation

January 2010 – For more than ten years, the State Children’s Health Insurance Program (SCHIP) has played an integral role in providing health coverage for millions of children. California has the nation’s largest SCHIP program, known as Healthy Families. The state receives roughly 16 percent of all annual federal SCHIP funds and covers approximately 1 million children and mothers through Healthy Families and other SCHIP-funded programs. The past 18 months have seen significant developments in SCHIP policy. Following extended debate and an ultimate presidential veto of a long-term national SCHIP reauthorization plan, Congress extended federal funding for SCHIP until March 2009. However, the top issue confronting the future program design of SCHIP is a set of conditions for states wishing to use federal funds to cover children with family incomes above 250 percent of federal poverty level (FPL). The conditions were issued in an August 17, 2007, letter from the Centers for Medicare and Medicaid Services (CMS), commonly known as the CMS “directive.”