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The Children's Health Insurance Program (CHIP) was added to the Social Security Act by the Balanced Budget Act of 1997. The purpose of this program is to provide health insurance to the country's uninsured children under the age of 19. Alabama was the first state in the nation to have a federally approved CHIP plan. Alabama's CHIP program is the result of a partnership between Alabama Department of Public Health, Alabama Medicaid Agency, and the former Alabama Child Caring Foundation.

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Background and Legislative Reports

The Children's Health Insurance Program (CHIP) was added to the Social Security Act by the Balanced Budget Act of 1997. The Act includes over $50 billion over a 10-year period to provide health insurance to America's 10 million uninsured children. The Health Care Financing Authority (HCFA), the government agency which also administers the Medicare and Medicaid programs, was designed as the responsible federal agency for CHIP. The State of Alabama is eligible to receive up to $85.6 million per year in federal funds which combined with the state match of $23.4 million would make up to $109 million available annually.

The Alabama Legislature allocated $5 million to begin the children's health insurance program in Alabama. This has enabled Alabama to request over $18 million in federal funds to begin implementing CHIP in Alabama during 1998. The Legislature also created a CHIP Commission to oversee the development of the state's plan for implementing CHIP and designated the Alabama Department of Public Health to submit the CHIP plan to HCFA and to receive the federal funds.

Even before the Alabama legislation was passed, a work group was formed and had already begun development of a CHIP plan for Alabama. The work group included representative from numerous agencies, professional associations, and interest groups. With the Alabama Department of Public Health and the Alabama Medicaid Agency taking a coordinating role, the work group determined that a two-phased approach would be the most beneficial for Alabama's children. The work group was organized into three subcommittees: eligibility, benefits and financing. Two other subcommittees have since been formed: outreach as a part of eligibility and information and data systems.

Phase I

In order to begin covering more children as soon as possible, Alabama applied to HCFA (now Centers for Medicare and Medicaid) for a Medicaid expansion to cover children born before October 1, 1983, up to age 19 under 100 percent of the Federal Poverty Level (FPL). At the time of this report, Alabama has received a favorable response from HCFA on this Phase I application indicating that the Alabama plan may be approved shortly. The target date for implementation was set for February 1, 1998.

Phase II and the CHIP Commission

The Legislatively-designated CHIP Commission met for the first time on October 7, 1997. Major actions were to authorize the multi-phased approach to implementing CHIP in Alabama, to endorse a full-funding (i.e., $23.4 million) budget for 1998, and to authorize continuance of the work group to provide input to the Commission.

The second meeting was held on November 12, 1997. At that time, the Commission heard reports and considered recommendations from the subcommittees. The following actions were taken: to select the HMO package of benefits as the benchmark package for Alabama, to contract benchmark plan administration, and to adopt a set of eligibility standards.

The third meeting was held on December 17, 1997. The Commission endorsed expansion of children's health insurance coverage from 100 percent of FPL to 200 percent of FPL through private insurance. The Commission also recommended that bids for the insurance be solicited on both a statewide and a regional basis. In further action, the Commission agreed to serve beyond the time frame defined in the legislation in order to continue oversight of plan development.

The Alabama Legislature allocated $5 million to begin the children's health insurance program in Alabama. This has enabled Alabama to request over $18 million in federal funds to begin implementing CHIP in Alabama during 1998. The Legislature also created a CHIP Commission to oversee the development of the state's plan for implementing CHIP and designated the Alabama Department of Public Health to submit the CHIP plan to HCFA and to receive the federal funds.

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Commission Members

  • Ed Richardson, Ed.D., State Superintendent of Education
    Represented by Joseph B. Morton, Ph.D., Deputy State Superintendent of Education
  • Commissioner Gwendolyn Williams, Alabama Medicaid Agency
  • Ms. Kitty Terry, Executive Director, Children's Trust Fund of Alabama
  • J. Robert Beshear. M.D., Children First Foundation
  • Marsha Raulerson, M.D., Designee of the Lieutenant Governor
  • The Honorable Gregory Wren, Designee of the Speaker, Alabama House of Representatives
  • The Honorable Dewayne Freeman, President Pro Tem of the Alabama Senate
  • The Honorable Seth Hammett, Speaker Pro Tem, Alabama House of Representatives
  • The Honorable Hank Sanders, Chair, Alabama Senate Finance and Taxation Education Committee
  • The Honorable William J. Fuller, Jr., Chair, Alabama House Ways and Means Committee

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