State Children's Health Insurance Program; Final Allotments to States, Commonwealths, and Territories for Fiscal Years 1998 and 1999

AGENCY:

Health Care Financing Administration (HCFA), HHS.

ACTION:

Notice.

SUMMARY:

This notice sets forth the final allotments of Federal funding available to each State, Commonwealth and Territory for fiscal years (FYs) 1998 and 1999 under title XXI of the Social Security Act (the Act). The final allotments are the same as the reserved allotments previously published in the Federal Register on February 8, 1999.

Established by section 4901 of the Balanced Budget Act of 1997 (Public Law 105-33), title XXI of the Act authorizes payment of Federal matching funds to States, Commonwealths and Territories to initiate and expand health insurance coverage to uninsured, low-income children through a State Children's Health Insurance Program (SCHIP), an expansion of a State Medicaid program, or a combination of both.

Recent legislation, the Medicare, Medicaid and SCHIP Balanced Budget Refinement Act (BBRA) of 1999 (Public Law 106-113, enacted November 29, 1999), amended title XXI of the Act in part by modifying the allotment formula, effective with the FY 2000 allotments. The FY 1998 and 1999 allotments contained in this notice were determined under the allotment formula in existence prior to the enactment of Public Law 106-113.

ADDRESSES:

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FOR FURTHER INFORMATION CONTACT:

Richard Strauss, (410) 786-2019.

SUPPLEMENTARY INFORMATION:

I. Background

The reserved FY 1998 allotments were originally published on September 12, 1997 in the Federal Register (62 FR 48098). On February 8, 1999, revised reserved FY 1998 allotments and reserved FY 1999 allotments were published in the Federal Register (64 FR 6102). The allotments were originally published as reserved because not all States, Commonwealths, and Territories had submitted and had State child health plans approved by HCFA. Final allotments may only be provided to those with approved plans. For purposes of planning and budgeting, the reserved FYs 1998 and 1999 allotments were calculated as if all States, Commonwealths and Territories had approved State child health plans.

Public Law 105-174, enacted on May 1, 1998, provides that for purposes of the calculation of allotments, a State child health plan approved by HCFA on or after October 1, 1998, and before October 1, 1999, must be treated as having been approved for both FYs 1998 and 1999. Because all States, Commonwealths, and Territories had approved plans prior to the end of FY 1999, the final FYs 1998 and 1999 SCHIP allotments are available to all of them and are, therefore, the same as the reserved allotments published on February 8, 1999.

While none of the provisions of Public Law 106-113 take effect retroactively, one provision of the legislation is incorporated into this notice due to the fact that the new legislation was enacted prior to the publication of this final notice. Specifically, section 704 of the BBRA of 1999 requires that the program enacted by title XXI of the Act be referred to exclusively as “SCHIP” rather than “CHIP” and that the term “State children's health insurance program” be substituted for “children's health insurance program.” This provision applies to the Secretary of the U.S. Department of Health and Human Services, as well as any other Federal officer or employee, in any publication or other official communication.

II. Purpose of This Notice

This notice sets forth the final allotments of Federal funding available to each State, Commonwealth and Territory for fiscal years (FYs) 1998 and 1999 under title XXI of the Social Security Act. Final allotments for a fiscal year are available to match expenditures under an approved State child health plan for three fiscal years, including the year for which the final allotment was provided. Federal funds appropriated for title XXI are limited, and the law specifies a formula to divide the total annual appropriation into individual allotments available for each State, Commonwealth and Territory with an approved child health plan, as described under section III of the February 8, 1999 Federal Register notice (64 FR 6102).

Section 2104(b) of the Act indicates that “the Secretary shall allot to each State * * * with a State child health plan approved under this title.” This language requires States, Commonwealths, and Territories to have an approved State child health plan for the fiscal year in order for the Secretary to provide an allotment for that fiscal year. If a State, Commonwealth, or Territory does not have an approved State child health plan for that fiscal year, the amount of their reserved allotment would be unavailable to them and would be allotted to those with approved State child health plans. On September 8, 1999, the last two States seeking approval for their State child health plans were granted approval. Since all States, Commonwealths, and Territories had approved plans prior to the end of FY 1999, this notice merely republishes as final the same FYs 1998 and 1999 allotments that were originally published as reserved allotments in the February 8, 1999 Federal Register notice.

We issued a proposed rule on March 4, 1999 in Federal Register (64 FR 10412), on the requirements for the allotment and payment process under title XXI. The allotments set forth in this notice were calculated in accordance with the process set forth in that proposed rule.

For informational purposes, we are republishing the FYs 1998 and 1999 allotment charts below, which are the same as those published in the February 8, 1999 notice.

III. Table of State Children's Health Insurance Program Final Allotments for FYs 1998 and 1999

Key to Tables I and II

Column/Description

Column A = Name of State, Commonwealth, or Territory.

Column B = Number of Children. The Number of Children for each State (provided in thousands) was determined and provided by the Bureau of the Census based on the arithmetic average of the number of low-income children and low-income children with no health insurance as calculated from the 1994, 1995, and 1996 March supplements to the Current Population Survey, as adjusted in August 1998. These data represent the number of people in each State under 19 years of age whose family income is at or below 200 percent of the poverty threshold appropriate for that family, and who are reported to be not covered by health insurance. The Number of Children for each State was developed by the Bureau of the Census based on the standard methodology used to determine official poverty status and uninsured status in their annual Current Population Surveys on these topics. For FYs 1998 and 1999, the Number of Children is equal to the number of low-income children in each State with no health insurance for the fiscal year.

Column C=State Cost Factor. The State Cost Factor for a State is equal to the sum of: .15, and .85 multiplied by the ratio of the annual average wages in the health industry per employee for the State to the annual wages per employee in the health industry for the 50 States and the District of Columbia. The State Cost Factor for each State was calculated based on such wage data for each State as reported, determined, and provided to HCFA by the Bureau of Labor Statistics in the Department of Labor for 1993, 1994, and 1995.

Column D=Product. The Product for each State was calculated by multiplying the Number of Children in Column B by the State Cost Factor in Column C. The sum of the Products for all 50 States and the District of Columbia is below the Products for each State in Column D. The Product for each State and the sum of the Products for all States provides the basis for allotment to States.

Column E=Percent Share of Total. This is the calculated percentage share for each State of the total allotment available to the 50 States and the District of Columbia. The Percent Share of Total is calculated as the ratio of the Product for each State in Column D to the sum of the products for all 50 States and the District of Columbia below the Products for each State in Column D.

Column F=Allotment. This is the State Child Health Program allotment for each State, Commonwealth, or Territory. For each of the 50 States and the District of Columbia, this is determined as the Percent Share of Total in Column E for the State multiplied by the total amount available for allotment for the 50 States and the District of Columbia for the fiscal year.

For each of the Commonwealths and Territories, the allotment is determined as the Percent Share of Total in Column E multiplied by the total amount available for allotment to the Commonwealths and Territories. For the Commonwealths and Territories, the Percent Share of Total in Column E is specified in section 2104(c) of the Act. For FY 1999, the Commonwealths and Territories were allotted an additional $32 million, which is added to the total allotment available to them for FY 1999, determined by the formula described above. The total amount is then allotted to the Commonwealths and Territories according to the percentages specified in section 2104 of the Act.

III. Impact Statement

HCFA has examined the impact of this notice as required by Executive Order 12866. Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when rules are necessary, to select regulatory approaches that maximize net benefits (including potential economic environments, public health and safety, other advantages, distributive impacts, and equity). We believe that this notice is consistent with the regulatory philosophy and principles identified in the Executive Order. The formula for the allotments is specified in the statute. Since the formula is specified in the statute, we have no discretion in determining the allotments.

The Unfunded Mandates Reform Act of 1995 requires that agencies prepare an assessment of anticipated costs and benefits before publishing any notice that may result in an expenditure in any year by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted each year for inflation). Because participation in the SCHIP program on the part of States is voluntary, any payments and expenditures States make or incur on behalf of the program that are not reimbursed by the federal government are made voluntarily. This notice will not create unfunded mandate on States, tribal or local governments. Therefore, we are not required to perform an assessment of the costs and benefits of these regulations.

Under Executive Order 12612, Federalism, we have reviewed this notice and determined that it does not significantly affect States' rights, roles, and responsibilities. Low-income children will benefit from payments under this program through increased opportunities for health insurance coverage.

We believe this notice has an overall positive impact by informing States, Commonwealths, and Territories of the extent to which they are permitted to expend funds under their State child health plans using their FYs 1998 and 1999 allotments.

In accordance with the provisions of Executive Order 12866, this notice was reviewed by the Office of Management and Budget.