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SCHIP: What's Happening? What's Next?

Cost Sharing

Implications for Enrollment


Sara Rosenbaum, J.D., Director, Center for Health Policy Research, George Washington University, Washington, DC.


Gregory A. Vadner, M.P.A., Missouri Department of Social Services, Jefferson City, MO.

David Parrella, Ph.D., Connecticut Department of Social Services, Hartford, CT.

Sandra Shewry, M.S.W., M.P.H., California Managed Risk Medical Insurance Board, Sacramento, CA.

Ms. Rosenbaum began her presentation with an overview of cost-sharing regulations for State Children's Health Insurance Programs (SCHIPs). Medicaid SCHIP expansion States must follow general Medicaid cost-sharing rules (unless they have an 1115 waiver). States that opt to implement a State-designed SCHIP program that covers families with incomes below 150 percent of the Federal poverty level (FPL) can impose only "nominal" cost-sharing. For families with incomes above 150 percent, cost-sharing may vary based on income and family size, however, cost-sharing for all families is capped at 5 percent of the family's annual income. Both income and family size can be defined by the State.

States charge premiums, enrollment fees, deductibles, coinsurance, and/or copayments for different reasons. These features are used to:

  • Increase family responsibility and accountability.
  • Control enrollment.
  • Deter inappropriate, unnecessary, or excessive care.
  • Promote appropriate care.
  • Control the size of the State's premium and the family's share of the premium.

Cost-sharing can have an impact on enrollment in many ways. Ms. Rosenbaum cited research that found that even with small premiums (less than 5 percent), States should expect decreased participation and adverse affects on the probability and amount of care received.

States should also have special provisions for children with medical costs that fall outside of the benefits included in the SCHIP program. These costs will be extra for the family, and if special provisions are made, will not fall inside the 5-percent limit. States may want to build into their SCHIP program a spend-down program or recognize medical expenses not covered under the SCHIP plan when calculating family income.

State respondents noted that cost-sharing in certain States is very political and varies significantly by State and income eligibility level. Some States that cover families at higher income eligibility levels have no cost-sharing, while others at low eligibility levels do. Cost-sharing is often determined by a State's environment and cannot be compared across States.


Rosenbaum S. Curriculum Vitae. Washington (DC): George Washington University, 1999 Feb.

Markus A, Rosenbaum S, Roby D. SCHIP, health insurance premiums and cost sharing: lessons from the literature. Washington (DC): George Washington University Medical Center, 1998 Oct. Health Resources and Services Administration Contract No.: 98-OA-140506.

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