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Ebbing and Flowing

Some Gains, Some Losses as SCHIP Responds to Third Year of Budget Pressure

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Document date: May 19, 2005
Released online: May 19, 2005

No. A-68 in Series, "New Federalism: Issues and Options for States"

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Note: This report is available in its entirety in the Portable Document Format (PDF).


Heading into 2004, SCHIP recorded its first-ever decline in enrollment. Between June and December 2003, the total number of children in the program nationwide dropped from 3,964,000 to 3,927,000 (Smith, Rousseau, and O'Malley 2004). While it represented just 1 percent of total enrollment, the drop was still a significant turning point, reflecting the cumulative impact of three years of state policy responses to the ongoing economic downturn.

As part of Assessing the New Federalism's multiyear SCHIP evaluation, we have been closely tracking how programs and policies have shifted in response to budget pressures. In the latter half of each of the past three years, we conducted in-depth telephone interviews with SCHIP directors in the 13 ANF states—Alabama, California, Colorado, Florida, Massachusetts, Michigan, Minnesota, Mississippi, New Jersey, New York, Texas, Washington, and Wisconsin. In our first brief, "SCHIP Dodges the First Budget Ax" (Howell, Hill, and Kapustka 2002), we reported that SCHIP programs were largely spared from any serious cuts during 2002's initial budget stress, even as many other programs in state budgets, including Medicaid, were scaled back. The only policy area where states began reducing funding was outreach. When asked why their programs appeared relatively immune from cuts, SCHIP directors told us it was because of the program's efficacy (in reducing the number of uninsured children), small size, high federal match rate, and popularity among policymakers, providers, and consumers.

In 2003, we found that states had begun to cut their SCHIP programs more seriously. In "Squeezing SCHIP: States Use Flexibility to Respond to the Ongoing Budget Crisis" (Hill, Stockdale, and Courtot 2004), we reported on such notable changes as the imposition of enrollment caps in 3 of the 13 ANF states, more onerous and restrictive enrollment procedures in 4 states, increased cost sharing in 6 states, reduced benefits in 2 states, reduced provider reimbursements in 5 states, and the virtual elimination of outreach in most states. Still, SCHIP directors reported that their programs fared well compared to other programs. Indeed, several ANF states continued to enhance enrollment procedures and benefits in 2003 even as they cut other parts of their programs.

For 2004, with the national and selected state economies showing signs of a turnaround (NCSL 2004), we have mixed results to report. On the plus side, some states took key actions to reverse previous significant cuts: in particular, enrollment caps were lifted in all three states that imposed them during 2003. At the same time, states kept many prior-year cuts in place, and some states imposed new ones. Overall, there were far fewer cuts to SCHIP in 2004 than in 2003. Policymakers appear to be using the flexibility built into Title XXI to manage their SCHIP programs through changing times, cutting or expanding as fiscal conditions permit. (Characteristics of the ANF states' SCHIP programs, as well as how they correlate with and differ from other states' programs nationwide, appear in box 1.)


Note: This report is available in its entirety in the Portable Document Format (PDF).



Topics/Tags: | Children and Youth | Health/Healthcare


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