HHS FY 2017 Budget in Brief - CMS - CHIP

Centers for Medicare & Medicaid Services (CMS): Children’s Health Insurance Program (CHIP)

Centers for Medicare & Medicaid ServicesThe Centers for Medicare & Medicaid Services ensures availability of effective, up-to-date health care coverage and promotes quality care for beneficiaries.

CMS CHIP Budget Overview

(Dollars in millions)

Current Law 2015 2016 2017 2017
+/- 2016
Children's Health Insurance Program 9,233 14,426 15,015 +589
Child Enrollment Contingency Fund 9 53 0 -53
Total Outlays, Current Law 9,242 14,479 15,015 +536



Proposed Law 2015 2016 2017 2017
+/- 2016
CHIP Legislative Proposals /1 180 +180
Total Outlays, Proposed Law /2 9,242 14,479 15,195 +716



Table footnotes

1/ The score reflects the impact on CHIP only. See Medicaid chapter for Medicaid impact.
2/ The proposal is paid for through an increase in tobacco taxes that will help reduce youth smoking and save lives.

The Children's Health Insurance Program (CHIP) was originally created under the Balanced Budget Act of 1997.  In 2009, CHIP was reauthorized under the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA), which provided an additional $44 billion in funding through FY 2013 and created several new initiatives to improve and increase enrollment in the program.  The Affordable Care Act extended funding for CHIP through FY 2015, and the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) extended funding for the program through FY 2017.  The Budget proposes an additional two-year extension of CHIP, through FY 2019.  Since September 1999, every state, the District of Columbia, and all five territories have approved CHIP plans.

How CHIP Works

CHIP is a partnership between the federal government and states and territories to help provide low income children with the health insurance coverage they need. The program improves access to health care and the quality of life for millions of vulnerable children less than 19 years of age.  In general, CHIP reaches children whose families have incomes too high to qualify for Medicaid, but too low to afford private health insurance.

Increasing Enrollment of Eligible Children

CMS’ goal is to improve availability and accessibility of health insurance coverage by increasing enrollment of eligible children in CHIP and Medicaid. For FY 2014, the most recent year for which CMS has final data, 43.7 million children were covered by Medicaid or CHIP at some point during the year. In FY 2017, CMS is targeting an increase in coverage to 46.1 million children.

States with an approved CHIP plan are eligible to receive an enhanced federal matching rate, which will range from 65 to 85 percent.  Beginning in FY 2016, and effective through FY 2019, each state’s enhanced federal matching rate increased by up to 23 percentage points to cover between 88 and 100 percent of total costs for child health care services and program administration, drawn from a capped allotment. 

States have a high degree of flexibility in designing their programs.  They can implement CHIP by expanding Medicaid, creating a separate program, or a combination of both approaches.  As of January 1, 2016, there were 14 Medicaid expansion programs, 2 separate programs, and 40 combination programs among the states, District of Columbia, and territories. 

In FY 2015, the CMS Office of the Actuary estimated that 8.9 million individuals received health insurance funded through CHIP allotments at some point during the year.  Approximately 5.8 million individuals were enrolled in CHIP on average throughout the year. 

A Child Enrollment Contingency Fund was established for states that predict a funding shortfall based on higher than expected enrollment.  The Contingency Fund received an initial appropriation of $2.1 billion in FY 2009 and is invested in interest bearing securities of the United States.  Payments from the Fund are currently authorized through FY 2017.

Through FY 2013, the Performance Bonus Fund authorized payments to states that performed five out of eight specific enrollment and retention activities set out in CHIPRA.  In FY 2014, CMS awarded $307 million to 23 states based on actual FY 2013 performance.

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Budget Extends CHIP Funding for an Additional Two Years

The passage of MACRA ensured continued comprehensive coverage for CHIP children through FY 2017. The net federal cost to extend CHIP for an additional two years, through FY 2019, is $3.1 billion.

Dollars in Millions FYs 2016-2025
(10 year)
Extend CHIP Funding for Two Additional Years 1,670
     CHIP Impact (non-add) (HHS) 13,700
     Medicaid Impact (non-add) (HHS) -5,560
     Marketplace Subsidies and Related Impacts (non- add) (Treasury) -6,470
Extend the Child Enrollment Contingency Fund for Two Years 0
Reauthorize the Performance Bonus Fund for Four Years 1,400
Total Net Federal Cost 3,070

Recent Program Developments


In addition to extending funding for state allotments through FY 2015, the Affordable Care Act increased each state’s enhanced federal match rate by 23 percentage points, not to exceed a total match rate of 100 percent, between FY 2016 and FY 2019.

Eligibility and Coverage

Under the Affordable Care Act, states use a simplified Modified Adjusted Gross Income standard to determine eligibility for coverage under a state’s CHIP program.  States can offer continuous eligibility for 12 months regardless of changes in family income, fast track enrollment using Express Lane Eligibility authority, and enroll children who are eligible for family coverage under a state employee health plan into CHIP.

Enrollment and Retention Outreach

MACRA provides new funding and extends the Outreach and Enrollment Program for two years through FY 2017.  Originally enacted under CHIPRA and extended by the Affordable Care Act, the Outreach and Enrollment Program provides grants and a national campaign to improve outreach and enrollment to children who are eligible for but unenrolled in Medicaid and CHIP.  Of the total $40 million appropriation under MACRA, $32 million is dedicated to outreach and enrollment grants, $4 million is dedicated to outreach and enrollment grants for children who are American Indian/Alaska Native, and $4 million is dedicated to the National Enrollment Campaign.  Outlay totals for Outreach and Enrollment Grants are reflected in the State Grants and Demonstrations chapter.

Improving Quality

CHIPRA provided $225 million over 5 years for activities that improve child health quality in Medicaid and CHIP, and in FY 2015, 18 states (across 10 grants) continued CHIPRA Quality Demonstrations to test ways to strengthen the quality of and access to children’s health care through a variety of health care delivery and measurement approaches at both the provider and patient levels.  The Protecting Access to Medicare Act of 2014 allocates $15 million of Adult Health Quality funding provided under the Affordable Care Act for the pediatric quality measures program, and MACRA provided an additional $20 million in new funding for the program.

CHIP Proposals

Extend CHIP Funding through FY 2019

The Budget proposes to extend funding for CHIP for two additional years through FY 2019, to ensure continued comprehensive and affordable coverage for CHIP children.  This proposal also extends the Child Enrollment Contingency Fund and reauthorizes the Performance Bonus Fund through FY 2019. 

Under current law, once states exhaust their CHIP allotments, children in Medicaid-expansion CHIP programs would continue to be covered by Medicaid because of the maintenance of effort requirements, though states would experience a reduction in the federal matching rate.  While many children would be eligible for financial assistance through the Marketplaces, some would transition to other forms of coverage, and others could become uninsured.  

This extension beyond the two-year extension provided by MACRA aligns with the Affordable Care Act requirement for states to maintain the eligibility and enrollment policies that were in place as of March 2010 through FY 2019 for children in Medicaid and CHIP.  A funding extension through FY 2019 will provide budgetary stability to states, protect children’s coverage and ensure continuity of care for families who rely on the program.

FY 2017 CHIP Legislative Proposals

Dollars in millions

(negative numbers reflect savings and positive numbers reflect costs)

CHIP Proposals 2017 2017
- 2021
- 2026
Extend CHIP Funding through FY 2019 /1 0 13,700 34,600
CHIP Impact 0 13,700 33,000
Medicaid Impact (non-add) 0 -5,560 200
Marketplace Subsidies and Related Impacts (non-add) 0 -6,470 1,400
Extend the Child Enrollment Contingency Fund through FY 2019 10 0 490
Reauthorize the Performance Bonus Fund through FY 2019 180 1,400 1,400
Total Outlays, CHIP Proposals /2 180 15,100 15,100

Table footnotes

1/ The net cost of this proposal is $11.9 billion over 10 years, which reflects impacts to CHIP and interactions with Medicaid, the Marketplace subsidies, and related impacts.  See Medicaid chapter for Medicaid impact.
2/ The proposal is paid for through an increase in tobacco taxes that will help reduce youth smoking and save lives.


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