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43 chapter four CHIP: Federalism and Implementation Implementation is where the rubber hits the road, where abstract policies and rules have real impacts on people, where intergovernmental relations are solidified in practice. As a process, implementation turns out to be every bit as political as rulemaking. Analysis of CHIP implementation reveals that in a collaborative effort to make the program work, broader national safeguards remained even as states regained some autonomy. The federal government negotiated directly with different states, which led to variations throughout the country. Despite some inconsistencies , CHIP accomplished its main goals: to provide public health insurance to eligible children and to reduce the disparities in public coverage, which was an important concern. How that happened provides insight into the health policy process and offers lessons for the implementation of national reform. After a slow start, implementation of CHIP was a success. In March 1997, only four states provided coverage for all children whose household incomes were less than 200 percent of the federal poverty level (FPL); by January 2000, thirty states provided coverage for all children under that level and five states for children up to or over 300 percent of the FPL.1 Prior to CHIP, only eleven states offered coverage to children living in households whose income was above 185 percent of the FPL; by 2007, forty-two states offered coverage to children up to or over 200 percent of the FPL.2 Those numbers add up to an important message: CHIP worked. As CHIP programs came on line, the enrollment procedures, eligibility rules, benefits, and cost-sharing provisions that emerged were remarkably consistent—much more so than could have been expected if the states had broad flexibility to set their own terms. CHIP also had an unanticipated effect on the Medicaid program: it streamlined the eligibility process and 04-2483-4 chap4.indd 43 6/25/13 5:33 PM 44 / chip: federalism and implementation increased enrollment. The balance between flexibility and greater national uniformity was achieved by a combination of CMS regulations (the stick) and enhanced federal funding (the carrot). Strictly applying universal standards to different baseline state systems and programs does not work. Flexibility is the grease that makes the system run. While CMS and the states ultimately found a balance between federal standards and state flexibility, the process was not easy. The two sides approached the task from different perspectives—CMS was concerned with national policy while the states were preoccupied with local politics, markets , and operational details—and that made communication difficult and frustrating. Still, the two sides managed to create a relationship through bargaining and negotiation, although CMS did dictate some standards. CMS dug in on particular issues, like cost sharing and giving priority to covering low-income children, when faced with pressure from Congress, the administration , or interest groups. Negotiations took center stage when solutions were unclear and resolution was in the interest of both parties. These findings foreshadow the opportunities and challenges for national reform; they also hint at potential unanticipated consequences. Simply boosting federal funding for Medicaid expansions and for health care exchanges will not be enough. Political opposition at the state level can slow, stall, or completely prevent reform, but opposition can be quieted by early success and a greater awareness among federal officials of the challenges that states face. States will need flexibility to make national reform work; the federal government cannot expect Texas to follow the same rules as Rhode Island. Unanticipated consequences may include larger enrollment in the traditional Medicaid program and higher-than-predicted state costs. Implementation is always difficult, and creating new administrative systems only increases the challenge. The longer time horizon for implementing national reform prolongs the pain, much as slowly pulling a Band-Aid off a cut does. Implementation is a political as well as technical undertaking, and success will be determined by elections, politicians, and the availability and use of resources. State Programs In the first year of CHIP, CMS quickly approved plans submitted by the states and territories. The majority of states (twenty-six) simply expanded their Medicaid program, but over time more states created separate programs.3 Enrollment in the first year was slow, and the fifty states ended up covering fewer than 830,000 children, well below expectations.4 Even toward the end of the second year (October 1, 1999), three states (Hawaii, Washington, and 04-2483-4 chap4.indd 44 6/25/13 5:33 PM [3.133.109.211] Project MUSE (2024...

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