State variation in SCHIP allocations: how much is there, what are its sources, and can it be reduced?

Allocations for the State Children's Health Insurance Program (SCHIP) varied 22% per state between 1999 and 2002. The funding fluctuations present significant problems for states as they develop budget priorities under difficult fiscal conditions. We examine sources of the variation in state allocations during the first four years of SCHIP, focusing on the Current Population Survey's "child component" of the allocation formula. We consider the trade-offs in using alternative estimates from the American Community Survey and model-based estimation. Obtaining reliable estimates of need for SCHIP allocations is critical for states dependent on federal support for insurance programs.