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Innovative Health Care Options in Medicaid and the State Children's Health Insurance Program

The Administration is committed to improving the opportunities for Americans with modest means to get mainstream health insurance coverage through the Medicaid and SCHIP programs. This requires reducing the burdens associated with Medicaid laws and administrative guidelines that historically have hampered the ability of states to expand coverage and to adopt cost-effective private sector innovations in providing coverage.

HIFA Initiative. As a first step, the Administration introduced the Health Insurance Flexibility and Accountability (HIFA) demonstration initiative in August 2001. The HIFA demonstration initiative encourages States to develop comprehensive insurance coverage for individuals with incomes up to twice the Federal poverty level using Medicaid and SCHIP funds. It gives States the flexibility to increase health insurance coverage through support of private group health coverage and simplifies the waiver application process. Arizona and California received the first HIFA waivers in December 2001 and January 2002, respectively. These SCHIP expansions provide coverage up to 200% of the poverty line.

Increased Opportunities for Innovative Coverage Options. The Administration will continue to build on the HIFA demonstration initiative in FY 2003. HHS will consult with stakeholders to develop proposals that would give States the statutory authority to provide broader coverage to low-income uninsured persons and allow States the flexibility to design their Medicaid programs without seeking waivers. States will be encouraged to use program resources to extend coverage to more of their neediest residents and reduce the number of people without health insurance coverage.

Extended Availability of SCHIP Funds. The President's 2003 budget will strengthen the SCHIP by making available to states an estimated $3.2 billion in unused SCHIP funds that otherwise would return to the federal treasury. The SCHIP law originally required states that did not use their full SCHIP allotment during the previous three years to return the unused funds. These additional matching funds will enable all states to expand coverage to the uninsured at enhanced Federal match rates.

Extended Transitional Medical Assistance. The budget will provide $350 million to continue funding Medicaid for families in transition from welfare to work. This coverage helps to ensure that work pays for families by preventing them from losing their health coverage when they start jobs.