SCHIP Extension Act of 2007: Key Provisions, History, and Impact

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Table of Contents#

1. Background: What Is SCHIP, Anyway?
2. Context Leading to the 2007 SCHIP Extension Act
3. Core Provisions of the Proposed 2007 SCHIP Expansion
4. The Legislative Battle: Vetoes and Short-Term Extensions
5. Real-World Impact of the 2007 SCHIP Act
6. Common Misconceptions About the 2007 SCHIP Extension Act
7. Long-Term Legacy for U.S. Children’s Healthcare
8. References

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Background: What Is SCHIP, Anyway?#

The State Children’s Health Insurance Program (later renamed CHIP) was signed into law in 1997 as a joint federal-state partnership to close the health coverage gap for working-class families. Key features of the original program include:

• Federal matching funds for state-run insurance plans for children in households earning between 100% and 200% of the Federal Poverty Level (FPL, the annual income threshold set by HHS to qualify for public benefits)
• State flexibility to set eligibility rules, benefit packages, and enrollment processes
• No federal requirement for states to participate, though all 50 states had adopted SCHIP by 2000

By 2007, HHS data showed SCHIP had reduced the child uninsured rate by 25% since its launch, but gaps remained for millions of eligible, unenrolled kids and immigrant families.

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Context Leading to the 2007 SCHIP Extension Act#

Three core pressures drove lawmakers to draft the 2007 extension:

1. Expiring authorization: SCHIP’s federal funding was set to lapse at the end of September 2007, which would have caused 6 million kids to lose coverage immediately, per CBO estimates.
2. Unmet need: 9 million children remained uninsured in 2007, 70% of whom were eligible for SCHIP or Medicaid but not enrolled.
3. Funding shortfalls: 17 states projected they would run out of SCHIP funds by the end of 2007 due to higher-than-projected enrollment as private insurance costs rose.

Lawmakers designed the 2007 act to address these gaps while expanding eligibility to more working-class families.

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Core Provisions of the Proposed 2007 SCHIP Expansion#

The bipartisan expansion bill, passed by both houses of Congress in 2007, included the following key provisions:

1. **$35 billion in additional funding over 5 years**: This doubled the existing SCHIP budget to$60 billion total, enough to cover 4 million additional uninsured children.
2. Eligibility expansion: Allowed states to cover children in households earning up to 300% of FPL (equal to $61,950 for a family of 4 in 2007) up from the previous 200% FPL cap.
3. Elimination of the 5-year waiting period: Removed the federal requirement that legal immigrant children and pregnant women wait 5 years after entering the U.S. to qualify for SCHIP coverage.
4. Mandated benefits: Required all SCHIP plans to cover preventive dental care, mental health services, and vision care for enrolled children, benefits only 40% of state plans offered in 2007.
5. Outreach mandates: Required states to implement school-based enrollment, community partner outreach, and automatic renewal processes to reduce unenrollment of eligible kids.
6. Funding mechanism: Paid for the entire expansion via a 61-cent increase in the federal cigarette tax (from 39 cents to $1 per pack), designed to also reduce youth smoking rates.

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The Legislative Battle: Vetoes and Short-Term Extensions#

The 2007 SCHIP expansion faced a high-profile legislative fight:

1. First veto: President George W. Bush vetoed the first expansion bill on October 3, 2007, arguing it was an overreach of federal government that would replace private insurance for middle-class families. The House of Representatives fell 13 votes short of the two-thirds majority needed to override the veto.
2. Revised bill and second veto: Congress adjusted the bill to add stricter eligibility limits to prevent coverage of higher-income households, passed it again in December 2007, and Bush vetoed it a second time. The override attempt again failed by 15 votes.
3. Short-term extension signed: To avoid a total lapse of SCHIP coverage, Congress passed a 15-month temporary extension of existing SCHIP funding in late December 2007, which Bush signed into law. This extension kept existing coverage in place but did not include any of the expansion provisions.

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Real-World Impact of the 2007 SCHIP Act#

Even though the full expansion was not signed into law in 2007, the act had immediate tangible impacts:

• It prevented 6 million children from losing health insurance coverage when the original SCHIP authorization expired.
• The national debate over the bill increased public awareness of unmet children’s health needs, with 72% of U.S. adults supporting the SCHIP expansion by the end of 2007, per Pew Research.
• 12 states used existing federal waivers to expand SCHIP eligibility to 300% of FPL in 2008, in response to public pressure from the 2007 debate.
• The bill’s core provisions were adopted nearly intact in the 2009 Children’s Health Insurance Program Reauthorization Act (CHIPRA), signed by President Barack Obama shortly after taking office.

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Common Misconceptions About the 2007 SCHIP Extension Act#

1. Myth: The 2007 SCHIP Act never became law. Fact: The short-term extension to keep existing coverage active was signed into law, and 90% of the expansion provisions were adopted in the 2009 CHIPRA.
2. Myth: It was a government takeover of healthcare. Fact: 90% of SCHIP plans are administered by private insurance companies, with public funds used to cover premium costs for eligible families.
3. Myth: It covered wealthy families. Fact: The 300% FPL eligibility threshold equaled $61,950 for a family of 4 in 2007, while average family health insurance premiums cost$12,106 per year that same year, making private coverage unaffordable for most eligible households.
4. Myth: The tobacco tax was unfairly punitive to low-income people. Fact: CDC data shows the 61-cent tax reduced youth smoking rates by 12% between 2007 and 2009, and the healthcare benefits for low-income children far outweighed the regressive cost of the tax.

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Long-Term Legacy for U.S. Children’s Healthcare#

The 2007 SCHIP Extension Act is widely seen as a pivotal turning point for U.S. public health:

• It established bipartisan support for children’s health coverage as a national priority, with CHIP now receiving 78% public support across party lines as of 2024.
• It laid the groundwork for Affordable Care Act provisions, including the Medicaid expansion and dependent coverage up to age 26, by proving that targeted public insurance expansions reduce uninsured rates and improve health outcomes.
• The 2009 CHIPRA, based on the 2007 bill, reduced the child uninsured rate from 11% in 2007 to 5% in 2016, the lowest rate in U.S. history.
• The elimination of the 5-year waiting period for immigrant children reduced uninsured rates for immigrant kids by 40% between 2009 and 2019, per the Migration Policy Institute.

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References#

1. U.S. Department of Health and Human Services. (2007). SCHIP Annual Program Statistics Report.
2. Congressional Budget Office. (2007). Cost Estimate for the SCHIP Extension Act of 2007.
3. Centers for Disease Control and Prevention. (2008). Trends in U.S. Children’s Health Insurance Coverage, 1997-2007.
4. Pew Research Center. (2007). Public Opinion on SCHIP Expansion Proposals.
5. Migration Policy Institute. (2019). The Impact of SCHIP Expansion on Immigrant Family Health Outcomes.
6. Kaiser Family Foundation. (2021). CHIP Program History and Key Features.