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pays more, thus that is the “upper payment limit” in Medicaid. The program is separate fromDSH and is financed with both state and local funds like the rest of Medicaid. Texas has alimited UPL plan that makes payments to public hospitals in rural counties under 100,000population, as well as to the nine large urban public hospital districts. 101The state gets the state portion of the matching funds through intergovernmental transfers fromthe nine largest hospital districts that are in the UPL plan. These districts received $24.9 millionin additional federal funds in FY 2001 and $105 million in FY 2002. Texas’ UPL plan complieswith recent federal regulations intended to stop perceived abuses in the program (like federalmatching funds being retained by states for non-health purposes), and has gone one stepfurther by requiring that all UPL funds received by the state to be used only for higher paymentsto hospitals or to support medical teaching facilities. 102History and Financing of SCHIPThe current Texas Children’s Health Insurance Program began in May 2000. There was aprevious program in place from 1998-2002 that was phased out as Medicaid took over coverageof the enrollees, who were aged 15-18 under 100 percent FPL. 103 SCHIP covers childrenwhose families cannot afford health insurance but who have too much income or too manyassets to qualify for Medicaid. The federal share for SCHIP is 72.15 percent in Texas for FFY2004 and the state share is 27.85 percent, meaning the federal government gives Texas $2.59for every state dollar spent. 104 Texas spent almost $330 million on SCHIP in FY 2004, includingboth federal and state funds. See the following table for SCHIP finances since implementation.Table 4. Texas Children’s Health Insurance Program Fiscal Trends, 1998-2005FederalFiscalYearAnnualFederalAllotmentTotal Available Expenditures BalanceReturned forRedistribution1998 $561,331,521 $561,331,521 $1,308,702 $560,022,819 $01999 558,680,510 1,118,703,329 38,533,875 1,080,169,454 02000 502,812,459 1,582,981,913 40,981,633 1,542,000,280 170,026,2702001 452,531,213 1,824,505,223 263,438,317 1,561,066,906 324,454,7562002 301,839,575 1,538,451,725 535,735,403 1,002,716,323 123,664,3912003 311,503,988 1,190,555,920 405,630,959 784,924,961 86,297,9152004 330,851,514 1,029,478,560 329,654,580 699,823,980 57,468,4772005 449,972,119 1,092,327,622 307,371,548 784,956,074 4,132,440(projected)Source: Texas Health and Human Services Commission, “FY 05 Federal Alloc LAR” (Excel spreadsheet, January2005).This data indicate that there has been unspent money left over each year since the SCHIPprogram started, and that money has been returned or is projected to be returned to the federalgovernment for redistribution each year since 2000.Texas Medicaid Program InformationAs of October 2004, there were 2,626,469 people enrolled in Medicaid in Texas. 105 Childrenand adults that fit into one of the eligible categories and income groups for coverage can applyfor Medicaid in person (required for most adults) or by mail. Eligibility lasts for six months, atwhich time adults must renew in person and most children can renew by mail (unless they arenot up-to-date on their Texas Health Steps check-ups or have not received a MedicaidB-21