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Texas estimates that the second phase of their CHIP program will enroll an estimated 423,000 children by September 2001, adding to the 57,000 children that the state estimated would be covered under its original plan, for a total of more than 480,000 children. The original plan was approved in July 1998.

Texas is eligible to receive as much as $558 million in new funds for fiscal year 1999 as the second phase expands coverage under the CHIP program. CHIP is historic, bipartisan legislation signed in 1997 by President Clinton. The CHIP law appropriates $24 billion over five years to help states expand health insurance to children whose families earn too much for traditional Medicaid, yet not enough to afford private health insurance. Texas, like all states with CHIP plans, will receive federal matching funds only for actual expenditures to insure children.

Together, the 56 state and U.S. territorial CHIP plans anticipate providing health insurance coverage for more than 2.6 million currently uninsured children over three years.

"It is gratifying to see so many states taking advantage of this wonderful new program to help working parents obtain health insurance for their children," Secretary Shalala said. "The Clinton Administration and the states are working together to give children the health care they need to live longer, healthier lives. That's good for all of us."

CHIP gives states three options for devising a plan to cover uninsured children: designing a new children's health insurance program; expanding current Medicaid programs; or a combination of both strategies. HHS must approve any expansion of a state's original CHIP plan before additional CHIP funds can become available.

The first phase of the Texas CHIP plan extended Medicaid coverage to children between the ages of 15 and 18 in families with incomes below 100 percent of the federal poverty level (FPL). The federal poverty level is $16,700 for a family of four.

The second phase of the CHIP plan will create a separate children's insurance program for children through age 18 whose families have incomes up to 200 percent of FPL. Cost sharing by families will be required at certain income levels, but it will not exceed 5 percent of the family's annual income.

The benefit package for the second phase is modeled on that offered to state employees and provides a comprehensive range of in- and out-patient medical services, including corrective lenses and frames, mental health and substance abuse treatment, and home- and community-based care.

"The Texas amendment is a positive demonstration that CHIP is working and that states are enthusiastic about this program," said Nancy-Ann DeParle, administrator of the Health Care Financing Administration (HCFA), which administers CHIP, Medicaid and Medicare.

"We're pulling together to help hard-working, low-income parents give their children the same kind of high quality health care that others take for granted," said Claude Earl Fox, M.D., M.P.H., administrator of the Health Resources and Services Administration, the agency working with HCFA and states to implement CHIP. "Free or low-cost health insurance is what families need to ensure their children can grow up strong and healthy."

Federal allotments for federal fiscal years 1998 and 1999 totaling $8.5 billion are available to states whose plans were approved by HHS by Sept. 30, 1999. To date, CHIP plans have now been approved in all states, U.S. territories and the District of Columbia. Today's approval of the state of Texas' expansion is the 29th CHIP amendment that has been approved by HHS.

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