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children’s health insurance program, it can choose from among five options for benefitspackages. It can offer SCHIP enrollees 1) the Blue Cross/Blue Shield PPO option offered tofederal employees; 2) the state employees health plan; 3) the HMO plan with the largestcommercial, non-Medicaid enrollment in the state; 4) coverage that is the actuarial equivalent toone of the three previous options; or 5) another health plan approved by the U.S. Secretary ofHealth and Human Services. 45If a state wants to expand its SCHIP eligibility to optional populations, it can apply for an 1115waiver (explained below in the section on waivers), as long as the state is already covering thetarget population of children under 19 with incomes under 200 FPL. Covering additionalpopulations under a SCHIP waiver, instead of using a Medicaid waiver, is an attractive optionfor states since the federal match is higher for SCHIP. To obtain a waiver, the state must showthat it is promoting enrollment and retention of eligible children. Under a policy instituted in2000, if the waiver does not focus on enrolling children or if it proposes to cover populationsother than low-income children (such as their parents), then the state had to show that it hadadopted at least three of the following five enrollment and retention procedures in its Medicaidand SCHIP programs:• A joint mail-in application and a common application procedure for Medicaid and SCHIP;• Elimination of assets tests;• Twelve-month continuous eligibility;• Simplification of the renewal process by allowing parents to establish their children’scontinuing eligibility by mail, and by having effective procedures for transferring childrenbetween Medicaid and SCHIP if their eligibility changes without a new application or agap in coverage;• Presumptive eligibility for children (meaning they can get immediate temporary coverageunder Medicaid or SCHIP if they appear to meet eligibility requirements of the programthey are applying for, before their application is officially processed and approved). 46These requirements may have been relaxed since then, but we have been unable to find areference for this.SCHIP FinancesSCHIP is a federal-state matching program with a higher federal share than Medicaid. Thefederal match is calculated by taking 70 percent of the state’s FMAP for Medicaid and adding 30percentage points (with a maximum of 85 percent). 47 The federal match in 2004 varied from 65percent (in 13 states) to 84 percent (in Mississippi). 48 The remaining balance is funded by thestates, and there are restrictions on the sources of these funds. States cannot use federalfunds, provider taxes, or beneficiaries’ cost-sharing to make up these funds, and states alsocannot use SCHIP funds to finance the state match for Medicaid. States also have to show amaintenance of effort to receive federal funds: they cannot lower their Medicaid eligibility levelsfrom what they had in place on June 1, 1997, and they must maintain at least the same level ofspending on children’s health programs that they had in 1996. 49 These provisions seek toensure that SCHIP funds cover the intended target population of uninsured children withoutstates trying to transfer additional children to the program in order to reap the higher federalmatching funds.SCHIP was appropriated approximately $40 billion over 10 years. The amounts are $4.295billion for FFY 1998, $4.275 billion for each year from FFY 1999-2001, $3.15 billion for eachB-11