In 1997, the balanced budget act established a Children's Health Insurance Program (CHIP) under Title XXI of the Social Security Act. This program is jointly financed by the federal and state governments and administered by individual states. Within broad Federal guidelines, each state determines the design of its program, eligibility groups, benefit packages, payment levels for coverage, and administrative and operating procedures. Children's Health Insurance Program Reauthorization Act of 2009 later reauthorized CHIP.
The Children's Health Insurance Program (CHIP) is a national program in the United States designed for families who earn too much money to qualify for Medical Assistance, yet cannot afford to buy private insurance for their children. The program was created to address the growing problem of children in the United States without health insurance. CHIP coverage provides eligible children with coverage for a full range of health services including regular checkups, immunizations, prescription drugs, lab tests, X-rays, hospital visits, emergency room visits and more.
States are allowed to impose premiums and co-payments for some services and for some groups. To receive CHIP coverage, families with eligible children, unless exempt, may be required to pay premiums. The premium payable represents the amount of money required to maintain CHIP coverage. Premiums are calculated based on the total family income and the number of eligible children being covered under CHIP. Co-payments may also be imposed for services. A co-payment is a fixed dollar amount paid by a CHIP enrollee each time certain covered services are received. This amount is paid directly to the provider.
States can provide care through two different ways, managed care or fee-for-service. Managed care offers most medical care through one source: a health plan. A health plan is an organization of licensed insurers, non profit organizations and managed care organizations (MCO's) who are contracted to provide services to eligible CHIP children. If children are enrolled in a managed care health plan, they go to one person for their medical care called a Primary Care Provider. A Primary Care Provider is the doctor, nurse practitioner, or physician assistant who takes care of the children to make sure they get all of the health care they need. With fee-for-service children do not belong to a health plan. They can go to any doctor, pharmacist, or other provider who will take the children's medical ID card for payment.