State Children'S Health Insurance Program

The Balanced Budget Act of 1997 (Public Law 105-33) established the State Children's Health Insurance Program (SCHIP) as Title XXI of the Social Security Act. This legislation, which involved the largest expansion of children's health insurance coverage in over thirty years, enables states to provide health insurance coverage to low-income children under age nineteen who are uninsured and ineligible for Medicaid.

Not since the enactment of Medicaid has there been a greater investment in children's health care in the United States. Title XXI provided over $40 billion in federal grants to states over a ten-year period. States were required to contribute a defined share of funds in order to obtain federal matching funds.

This legislation provided states flexibility in how they design their program. States can choose one of three approaches: (1) expand the current Medicaid program, (2) create or expand a separate state children's health insurance program, or (3) use a combination of both approaches. The majority of states created a non-Medicaid SCHIP program for at least some of their SCHIP-eligible children. Fifteen states created a non-Medicaid SCHIP program only, and nineteen states created a state program in combination with a Medicaid expansion. The remaining nineteen states used SCHIP funds to expand Medicaid only.