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In 1998, there was not yet any money available from the tobacco lawsuit settlement, and the federally mandated Children’s Health Insurance Program was not yet operational. Both have an impact on subsequent health care spending.

Children’s Health Insurance Program

Purchaser: State Government
Program: Children’s Health Insurance Program

Description: The 1999 Texas Legislature established the state’s new Children’s Health Insurance Program (CHIP). The program draws federal CHIP funds at an enhanced federal matching rate of 74 percent. Currently, Texas federal Medicaid match rate is 61 percent. The enhanced rate draws more federal funds to be used for obtaining health insurance for children.

CHIP funds help families purchase health insurance through managed care organizations for children younger than 19 years old. To qualify, family income must be less than 200 percent of the federal poverty level. Copayments and premiums are on a sliding scale.

CHIP became available statewide on May 1, 2000. The Texas Health and Human Services Commission administers CHIP with the Texas Department of Human Services and the Texas Department of Health.

Texas funds the state’s CHIP match with proceeds from the tobacco lawsuit settlement. State law stipulates CHIP is authorized only as long as there are tobacco settlement proceeds available to match federal funds.

The Texas Legislature appropriated about $180 million from tobacco settlement receipts for CHIP. According to the latest CHIP plan, Texas plans to spend an estimated $383 million on the CHIP program in the 2000-01 biennium, counting federal funds plus allocated tobacco settlement receipts.

Texas Total, 2000-01 Biennium (projected)
Amount Spent: $ 383,231,836
Type of funding:
Federal Title 21 (CHIP) $ 272,393,260
Federal Title 19 (Medicaid) $ 4,376,276
State Tobacco Settlement $ 106,462,300

Number of Recipients: 423,345 by the end of fiscal 2001

Average Cost per Recipient: $78.85 per month in fiscal 2001

Source: Texas Health and Human Services Commission