The State Children’s Health Insurance Program (SCHIP) is blessed with many allies, but it faces a strategic challenge with the necessity of shifting constantly back and forth between playing offense and defense. State budgets are tight, and the Bush administration has proposed a 5-year, $4.8 billion increase for SCHIP that is less than half the $12 billion that analysts think will be needed to maintain current enrollment and benefit levels in the program. Health and human services secretary Michael Leavitt warns that “the administration will not support a gradual government takeover of the health care market.”

On the other hand, calls for SCHIP and Medicaid expansions are coming from Republican as well as Democratic governors and state legislatures. Illinois, Massachusetts, Pennsylvania, Tennessee, and Washington are pursuing universal coverage for kids. In the two most closely watched state experiments with universal coverage, California and Massachusetts are both building deliberately on public programs for low-income families. The New York Times reported Sunday on a disturbing increase in infant mortality rates and racial disparities in several southern states, noting an apparent association with recent Medicaid, SCHIP, and welfare cuts. The Robert Wood Johnson Foundation has put its formidable muscle behind a push for kids coverage as the focus of its annual Cover the Uninsured Week, beginning April 23.

Fortunately for its friends, the SCHIP program has qualities that lend themselves aptly to the kind of policy jujitsu that is needed for switching nimbly from defense to offense. Although condemned by some, the variability of state Medicaid and SCHIP programs reflects the essentially federalist character of both, which in turn accounts for much of their political resilience and programmatic effectiveness. Secretary Leavitt wields a boomerang when he calls for SCHIP to return to its roots.

“Federalism is frustrating,” said Alan Weil of the National Academy for State Health Policy, at a March hearing of the House Energy and Commerce Health Subcommittee. “It allows for — indeed it celebrates — the diversity of our nation; and it is not orderly.” In SCHIP, Weil testified, “state choices vary on a tremendous range of dimensions such as the benefit package, the delivery system, provider payment levels, health plan accountability mechanisms, family premiums and copayments, and integration with employer-sponsored insurance and Medicaid.” But, he added, “the tremendous success and bipartisan popularity of this program is directly tied to its flexible, federal structure.”

Massachusetts and California have very different ideas about how to achieve statewide coverage, but the formula in both cases relies significantly on federal dollars as well as state initiative. Even more than Medicare, Medicaid involves public-private partnerships that don’t really conform to Secretary Leavitt’s characterization. But for those who dream that the next presidential election cycle will bring another chance at a national coverage scheme, state action brings uncertainty along with hope. How will the pieces fit together? Federalism as it has been practiced in SCHIP may be the closest thing to an answer that is currently available.

Health Affairs March/April 2007 issue is devoted to children’s health care and features several articles on Medicaid and SCHIP. Estimates of Medicaid’s long-term sustainability by Richard Kronick and David Rousseau appeared in a February 23 Web Exclusive