[Federal Register Volume 64, Number 25 (Monday, February 8, 1999)]
[Notices]
[Pages 6102-6108]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-2859]



[[Page 6102]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[HCFA-2014-N]
RIN 0938-AI64


State Children's Health Insurance Program; Reserved Allotments to 
States for Fiscal Year 1999 and Revised Reserved Allotments to States 
for Fiscal Year 1998

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice.

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SUMMARY: This notice provides notification of the reserved fiscal year 
(FY) 1999 State allotments available to provide Federal funding to 
individual States, Commonwealths, and Territories for expenditures in 
the new State Children's Health Insurance Program (CHIP) established 
under title XXI of the Social Security Act (the Act). This notice also 
provides revised reserved State CHIP FY 1998 allotments, which were 
originally published in the Federal Register on September 12, 1997. The 
notice describes the methodology and process that HCFA uses to 
determine the reserved State CHIP allotments in accordance with section 
2104 of the Act. These reserved State CHIP allotments are estimates of 
States' FY 1998 and FY 1999 title XXI allotments, assuming that each 
State were to submit, and receive approval for, a State child health 
plan. Under title XXI the amount of State's allotments for a fiscal 
year is available for 3 years for States with approved child health 
plans.
    Established by section 4901 of the Balanced Budget Act of 1997 
(Pub. L. 105-33), the State Children's Health Insurance Program 
provides Federal matching funds to States to initiate and expand health 
insurance coverage to uninsured, low-income children.
    Copies: To order copies of the Federal Register containing this 
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    This Federal Register document is also available from the Federal 
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FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.

SUPPLEMENTARY INFORMATION:

I. General Background on New Legislation

    Section 4901 of the Balanced Budget Act of 1997 (BBA), Pub. L. 105-
33, as amended by Pub. L. 105-100, added title XXI to the Social 
Security Act (the Act), which was further amended by Pub. L. 105-174. 
Title XXI authorized a new State Children's Health Insurance Program 
(CHIP) to assist State efforts to initiate and expand child health 
assistance to uninsured, low-income children. Child health assistance 
is provided primarily for obtaining health benefits coverage through 
(1) obtaining coverage that meets requirements specified in the law 
under section 2103 of the Act; or (2) expanding coverage under the 
State's Medicaid plan under title XIX of the Act; or (3) a combination 
of both.
    In order to be eligible for Federal matching funds under the CHIP, 
States must submit to the Secretary, and receive approval for, a State 
child health plan that describes how the State intends to use the funds 
provided under title XXI. The plan must meet certain criteria specified 
in the statute, which include benefit packages, eligibility standards 
and methodologies, coverage requirements, basic and additional services 
offered, strategic objectives and performance goals, plan 
administration, and evaluations.
    The law limits the total amount of Federal funds for the State 
Children's Health Insurance Program and specifies the formula that is 
to be used to determine an allotment for each State from this total 
amount, as described under section III of this notice.

II. Purpose of This Notice

    We are issuing this notice to provide notification to States, 
Commonwealths, and Territories of the reserved allotments that will be 
available to them for FY 1999, and also to provide notification of 
revised State CHIP reserved allotments for FY 1998 (that were 
originally published in the Federal Register on September 12, 1997), 
for child health insurance expenditures if they have an approved State 
child health plan under title XXI of the Act, or to claim an enhanced 
Federal medical assistance percentage (FMAP) rate for certain CHIP-
related Medicaid expenditures under title XIX of the Act. States, 
Commonwealths, and Territories may submit State child health plans to 
HCFA for approval, to be effective as early as October 1, 1997. We 
believe that this notification at the beginning of a fiscal year is 
necessary to enable States, Commonwealths, and Territories to conduct 
advance planning and budgeting for title XXI and CHIP-related title XIX 
programs.
    Section 2104(b) of the Act indicates that ``the Secretary shall 
allot to each State * * * with a State child health plan approved under 
this title.'' This language requires States to have an approved State 
child health plan for the fiscal year in order for the Secretary to 
provide an allotment to that State for that fiscal year. If a State 
does not have an approved State child health plan for that fiscal year, 
the amount of that State's reserved allotment could be unavailable to 
that State and could be allotted to States with approved child health 
plans.
    Pub. L. 105-174, enacted on May 1, 1998, provides that for purposes 
of the calculation of allotments, a State child health plan approved by 
HCFA on or after October 1, 1998, and before October 1, 1999, must be 
treated as having been approved for both FY 1998 and FY 1999. However, 
a State's allotment for a fiscal year may only be used for CHIP and 
CHIP-related Medicaid expenditures that are allowable under the 
approved State child health plan or the Medicaid State plan. Federal 
financial participation (FFP) would not be available for expenditures 
made in and claimed for periods before the effective date of the 
approved State child health plan or the Medicaid State plan.
    The reserved allotments for FY 1998 and FY 1999 in this notice were 
determined by application of the formula specified in title XXI of the 
Act and described in detail in section III of this notice. Section 707 
of the Act Making Appropriations for the

[[Page 6103]]

Departments of Labor, Health and Human Services and Education, and 
Related Agencies for the Fiscal Year ending September 30, 1999, and For 
Other Purposes (``1999 Appropriations Act''), as enacted by section 
101(f) of Pub. L. 105-277, requires that the FY 1999 reserved State 
CHIP allotments be determined using the same data used in determining 
the revised FY 1998 State CHIP allotments. The effect of this statutory 
change is to distribute the total funds available for FY 1999 among the 
50 States and the District of Columbia in the same proportions as the 
total funds were distributed for FY 1998. However, because the total 
funds available nationally for allotment to the States and the District 
of Columbia for FY 1999 is $19,950,000 million lower than the total 
funds available nationally for FY 1998, the actual FY 1999 reserved 
allotments for each State and the District of Columbia is slightly 
lower than each State's FY 1998 reserved allotment. Final allotments 
for each State will be determined in accordance with statutory 
requirements. We plan to issue a notice of proposed rulemaking as soon 
as possible on the requirements for the allotment and payment process 
under title XXI. Although final allotments have not been determined, 
under section 2105(e) of the Act, we have authority to make ongoing 
payments based on advance estimates of allowable expenditures. At this 
time, we intend to make advance payments to States with approved child 
health plans based on these reserved allotments. Issues related to the 
allotment and payment process, however, will be open for public comment 
as part of the rulemaking process.

III. Methodology for Determining Reserved Allotments for States, 
Commonwealths, and Territories

    This notice specifies in Tables I and II under section IV the 
revised reserved FY 1998 allotments, and the reserved FY 1999 
allotments, respectively, that would be available to individual States, 
Commonwealths, and Territories for child health assistance expenditures 
under approved State child health plans, assuming that each State, 
Commonwealth, or Territory qualifies for such an allotment. The 
reserved FY 1998 allotments were originally published in the Federal 
Register on September 12, 1997. As discussed below, the FY 1998 
reserved allotments have been recalculated to reflect the way the 
Bureau of the Census compiles reported data on the number of low-income 
children in each State who have no health insurance in the March 
supplements to the Current Population Survey (CPS), and to incorporate 
an increase in the title XXI appropriation, applicable only to FY 1998, 
as enacted by Pub. L. 105-100 on November 19, 1997.
    In accordance with section 707 of the 1999 Appropriations Act, as 
enacted by section 101(f) of Pub. L. 105-277, the FY 1999 allotments 
contained in this notice were determined using the same data that were 
used in determining the revised reserved FY 1998 State CHIP allotments.
    We have applied the statutory formula specified in section 2104 of 
the Act in determining the reserved allotments for FY 1998 and FY 1999, 
as discussed below.
    Section 2104(a) of title XXI provides that, for purposes of 
providing allotments to the 50 States and the District of Columbia, the 
following amounts are appropriated: $4.295 billion for FY 1998; $4.275 
billion for each FY 1999 through 2001; $3.150 billion for each FY 2002 
through 2004; $4.050 billion for each FY 2005 through 2006 and $5 
billion for FY 2007. However, under section 2104(c) of the Act, 0.25 
percent of the total amount appropriated each year is available for 
allotment to the Territories and Commonwealths of Puerto Rico, Guam, 
the Virgin Islands, American Samoa, and the Northern Mariana Islands. 
Furthermore, for FY 1999, an additional $32 million was appropriated 
for allotment only to the Territories and Commonwealths under section 
706 of the 1999 Appropriations Act, as enacted by section 101(f) of 
Pub. L. 105-277. This newly appropriated $32 million for the 
Commonwealths and Territories for FY 1999 does not reduce the previous 
FY 1999 CHIP appropriation ($4.275 billion) and is in addition to 0.25 
percent of the total annual appropriated discussed above. The total 
amounts are allotted to the Commonwealths and the Territories according 
to the following percentages: Puerto Rico, 91.6 percent; Guam, 3.5 
percent; the Virgin Islands, 2.6 percent; American Samoa, 1.2 percent; 
and the Northern Mariana Islands, 1.1 percent.
    Further, under sections 4921 and 4922 of Public Law 105-33, the 
total allotment available to the 50 States and the District of Columbia 
is reduced by an additional total of $60,000,000; $30,000,000 each for 
a special diabetes research program for Type I diabetes and special 
diabetes programs for Indians. The diabetes programs are funded from 
FYs 1998 through 2002 only.
    Therefore, the total amount of the allotment available for the 50 
States and the District of Columbia for FY 1998 and FY 1999 was 
determined in accordance with the following formula:

ATA = 
S2104(a)-T2104(c)-D4921-D4922

ATA = Total amount available for allotment to the 50 States 
and the District of Columbia for the fiscal year.
S2104(a) = Total appropriation for the fiscal year indicated 
in section 2104(a)of the Act. For FY 1998, this is $4,295,000,000. For 
FY 1999, this is $4,275,000,000.
T2104(c) = Total amount available for allotment for the 
Commonwealths and Territories; determined under section 2104(c) of the 
Act as 0.25 percent of the total appropriation for the 50 States and 
the District of Columbia.

    For FY 1998, this is:

.0025  x  $4,295,000,000 = $10,737,500
    For FY 1999, this is:

.0025  x  $4,275,000,000 = $10,687,500
D4921 = Amount of grant for research regarding Type I 
Diabetes under section 4921 of Pub. L. 105-33. This is $30,000,000 for 
FYs 1998 through 2002.
D4922 = Amount of grant for diabetes programs for Indians 
under section 4922 of Pub. L. 105-33. This is $30,000,000 for FYs 1998 
through 2002.

    For FY 1998, the total amount available for allotment to the 50 
States and the District of Columbia is $4,224,262,500. This was 
determined as follows:

ATA($4,224,262,500) = S2104(a)($4,295,000,000)-
T2104(c)($10,737,500)-D4921 ($30,000,000)-
D4922($30,000,000)

    For FY 1999, the total amount available for allotment to the 50 
States and the District of Columbia is $4,204,312,500. This was 
determined as follows:

ATA($4,204,312,500) = S2104(a)($4,275,000,000)-
T2104(c)($10,687,500)-D4921 ($30,000,000)-
D4922($30,000,000)

    The total amount available for allotment to the 50 States and the 
District of Columbia is allotted to each State with a child health plan 
approved under title XXI based on the formula indicated at section 
2104(b)(1) of the Act. The fiscal year allotment for each State with an 
approved child health plan is determined on the basis of the product of 
two factors, the Number of Children and the State Cost Factor, for each 
State divided by the sum of these products over all States.
    For FYs 1998 through 2000, the first factor, the Number of 
Children, is based

[[Page 6104]]

only on the total number of low-income, uninsured children in the State 
with FY 1999 being the only exception, as discussed above. For FY 2001 
only, the Number of Children is calculated as the sum of 75 percent of 
the low-income, uninsured children in the State, and 25 percent of the 
number of low-income children in the State. For FY 2002 and succeeding 
years through FY 2007, the Number of Children is calculated as the sum 
of 50 percent of the low-income, uninsured children in the State, and 
50 percent of the number of low-income in the State.
    The Number of Children for each State is developed by the Bureau of 
the Census based on the standard methodology used to determine official 
poverty status and uninsured status in their annual CPS on these 
topics. As part of a continuing formal process between HCFA and the 
Bureau of the Census, each fiscal year HCFA obtains the Number of 
Children data officially from the Bureau of the Census.
    In determining the FY 1998 reserved allotments, as were originally 
published in the Federal Register on September 12, 1997, the Number of 
Children for each State (provided in thousands) was determined and 
provided by the Bureau of the Census based on the arithmetic average of 
the number of low-income children and low-income children with no 
health insurance as calculated from the three most recent March 
supplements to the CPS before the beginning of FY 1998. That is, we 
used the most recent official data that were available from the Bureau 
of the Census and Bureau of Labor Statistics, respectively, before 
September 1, 1997 (that is, through August 31, 1997).
    In particular, through August 31, 1997, the only official data 
available from the Bureau of the Census on the numbers of children were 
data from the 3 March CPSs conducted in March 1994, 1995, and 1996 that 
reflected data for the 3 calendar years 1993, 1994, and 1995. In 
calculating the FY 1998 reserved allotments, we did not use the Bureau 
of the Census data from the March 1997 CPS because those data were not 
official and available until a later date, after September 1, 1997. If 
we waited for the official data available from the Bureau of the Census 
through September 30, 1997, we would have had to delay publication of 
the FY 1998 reserved CHIP allotments until after the beginning of FY 
1998. Since this was a new program, we believed that for the first year 
States needed to be able to plan in advance.
    HCFA did not modify or adjust the Bureau of Census compilation of 
CPS data on the number of children. However, HCFA is incorporating a 
correction made by the Bureau of Census to more accurately reflect 
underlying reported CPS data. The Bureau of Census recognized that the 
data collected and reported on the numbers of children in the March 
Supplements to the CPS were not accurately reflected in the compilation 
provided to HCFA for the September 12, 1997, calculation of the FY 1998 
reserved allotments. In particular, children who had access to services 
through the Indian Health Service (IHS), but no other health insurance 
coverage, were identified in the compiled number of children as having 
health insurance coverage. The Bureau of Census has adjusted the 
compiled numbers of children to reflect the fact that the data shows 
that these children do not actually have health insurance coverage. In 
light of this adjustment to more accurately reflect reported CPS data, 
we have recalculated and are republishing in this notice the FY 1998 
reserved allotments. This is consistent with the express incorporation 
of this Bureau of Census adjustment into the fiscal year 1999 allotment 
calculation under Public Law 105-277.
    In accordance with section 707 of the 1999 Appropriations Act, as 
enacted by section 101(f) of Pub. L. 105-277, the FY 1999 reserved 
allotments are based on the same data as the revised FY 1998 reserved 
allotments. Specifically, for FY 1999, the Number of Children for each 
State (provided in thousands) was determined and provided by the Bureau 
of the Census based on the arithmetic average of the number of low-
income children and low-income children with no health insurance as 
calculated from the 1994, 1995, and 1996 March supplements to the CPS, 
as adjusted in August 1998. Since the FY 1999 reserved allotments are 
based on the same data as the revised FY 1998 reserved allotments, the 
data reflect the updated method for accounting for individuals' access 
to IHS facilities and services.
    The second factor, the State Cost Factor, is based on annual 
average wages in the health services industry in the State. The State 
Cost Factor for a State is equal to the sum of: .15, and .85 multiplied 
by the ratio of the annual average wages in the health industry per 
employee for the State to the annual wages per employee in the health 
industry for the 50 States and the District of Columbia. The State Cost 
Factor for each State was calculated based on such wage data for each 
State as reported, determined, and provided to HCFA by the Bureau of 
Labor Statistics (BLS) in the Department of Labor. For the FY 1998 
reserved allotments, we used the final State Cost Factor data for each 
of the most recent 3 years before the beginning of the fiscal year, 
through August 31, 1997 available from BLS. For the FY 1999 reserved 
allotments, we used the same final State Cost Factor data available 
from BLS for 1993, 1994, and 1995, as used in calculating the FY 1998 
reserved allotments.
    The average of wages per employee for the 50 States and the 
District of Columbia was calculated by HCFA directly from the State-
specific data for each State provided by the BLS. This was necessary 
because BLS suppressed certain State-specific data in providing HCFA 
with the State-specific average wages per health services industry 
employee. BLS is required to suppress such data under the Privacy Act. 
The State Cost Factor is determined based on the calculation of the 
ratio of each State's average annual wages in the health industry to 
the National average annual wages in the health care industry. In order 
for such National average to appropriately reflect the State-specific 
suppressed data, HCFA calculated the National average wages directly 
from the State-specific data provided by BLS. As part of a continuing 
formal process between HCFA and the BLS, each fiscal year HCFA will 
obtain these wage data officially from the BLS.
    Under section 2104(b)(4) of the Act each of the 50 States and the 
District of Columbia will receive a minimum allotment of $2 million. 
Under this provision, to the extent any State's allotment is increased 
to $2,000,000 from a lower amount that would otherwise have been 
allotted to the State, the allotments to other States and the District 
and Columbia must be reduced in a ``pro rata manner'' (but not below 
$2,000,000) so that the total amount available for allotment to all 
States does not exceed the amount previously available. For FY 1998 and 
FY 1999, no State's reserved allotment is below $2,000,000; therefore, 
no pro rata adjustment was necessary.
    Following is an explanation of how HCFA applied the two State-
related factors specified in the statute to determine the States' child 
health plan reserved allotments for FY 1998 and FY 1999. The formula 
for determining each State's reserved allotment for FY 1998 and FY 1999 
of the total available allotment is:
[GRAPHIC] [TIFF OMITTED] TN08FE99.001

SAi = Allotment for a State.

[[Page 6105]]

Ci = Number of Children. This is the number of certain low-
income children in a State as officially reported, defined, and 
provided to HCFA by the Bureau of the Census. For FY 1998 and FY 1999, 
this is the number of children under age 19 with no health insurance 
whose family income is at or below 200 percent of the poverty line for 
a family of the same size. (section 2104(b)(2)(B))
SCFi = The State cost factor for a State (section 
2104(b)(1)(A)(ii)). This is equal to:
.15 + .85  x  (Wi/WN) (section 2104(b)(3)(A)).
Wi = Certain annual average wages per health industry 
employee for a State.
WN = Certain annual wages per health industry employee for 
the 50 States and the District of Columbia.

    The annual wages per employee for a State or for all States for a 
fiscal year is equal to the average of such wages for employees in the 
health industry, as reported by the Bureau of Labor Statistics of the 
Department of Labor.

(Ci  x  SCFi) = The sum of the products 
of Ci  x  SCFi for each State (section 
2104(b)(1)(B)).
ATA = Total amount available for allotment to all 
States for the fiscal year. For FY 1998, this is $4,224,262,500. For FY 
1999, this is $4,204,312,500.

    Section 2104(e) of the Act requires that the amount of a State's 
allotment for a fiscal year be available to the State for a total of 3 
years, the fiscal year for which the State child health plan is 
approved and 2 years following. Section 2104(f) of the Act requires the 
Secretary to establish a process for redistribution of the amounts of 
States' allotments that are not expended during the 3-year period to 
States that have fully expended their allotments. HCFA will soon issue 
a proposed rule that will address the redistribution process and 
propose to incorporate the process in Federal regulations.
    In accordance with section 2104(b) and (c) of the Act, the total 
allotment for all States for each fiscal year is available to the 50 
States and District of Columbia, the Commonwealths, and the 
Territories. Although the statute precludes the Secretary from making 
an allotment to a specific State until it has an approved State child 
health plan, because of the statutory provisions for redistribution of 
unused amounts of allotments, the availability of allotments for 3 
years, and the potential for retroactive effective dates of State child 
health plans back to October 1, 1997, we believe it is necessary to 
establish and publish these reserved allotment amounts for each fiscal 
year so that States can plan appropriately for the operation of their 
State children's health insurance programs under title XXI, effective 
as early as October 1, 1997. No payments may be made from these 
allotments until a State has an approved State child health plan under 
title XXI.
    In developing the reserved allotment amounts for FY 1998 and FY 
1999, we applied the following principles, for which we will be 
inviting public comment during the rulemaking process.
     For each fiscal year for FYs 1998 through 2007, an 
allotment amount will be reserved for all 50 States and the District of 
Columbia and for the Commonwealths and Territories, regardless of 
whether every State, Commonwealth, or Territory has submitted and the 
Secretary has approved a State child health plan. This will provide 
States with the flexibility and time to develop their programs and 
submit their State child health plans.
     The formula for ``reserving'' an allotment amount for each 
State will be the same as the formula contained at section 2104(b) of 
the Act (with the only qualification being for FY 1999, as discussed 
above). The reserved amount is an estimate of the State's title XXI 
allotment upon submission and approval of the State's child health 
plan.
     Under sections 2101(b)(2) and 2105(a) of the Act, no 
payment of Federal funds from a State's allotment is available for 
expenditures under a State's title XXI program unless the State has an 
approved State child health plan. Therefore, States may be at risk for 
expenditures made under a title XXI child health plan that is 
submitted, but not yet approved.
    Section 706 of the 1999 Appropriations Act, as enacted by section 
101(f) of Pub. L. 105-277, provided for FY 1999 only, an additional $32 
million available for allotment only to the Commonwealths and 
Territories. Therefore, the total available allotment to the 
Commonwealths and Territories in FY 1999 is $42,687,500 (that is, 
$32,000,000 plus $10,687,500 (.25 percent of the FY 1999 appropriation 
of $4,275,000,000)).

IV. Table of Reserved State Children's Health Insurance Program 
Allotments for FY 1998 and FY 1999

                         Key to Tables I and II
------------------------------------------------------------------------
         Column                            Description
------------------------------------------------------------------------
Column A =               Name of State, Commonwealth, or Territory.
Column B =               Number of Children. The Number of Children for
                          each State (provided in thousands) was
                          determined and provided by the Bureau of the
                          Census based on the arithmetic average of the
                          number of low-income children and low-income
                          children with no health insurance as
                          calculated from the 1994, 1995, and 1996 March
                          supplements to the Current Population Survey,
                          as adjusted in August 1998. These data
                          represent the number of people in each State
                          under 19 years of age whose family income is
                          at or below 200 percent of the poverty
                          threshold appropriate for that family, and who
                          are reported to be not covered by health
                          insurance. The Number of Children for each
                          State was developed by the Bureau of the
                          Census based on the standard methodology used
                          to determine official poverty status and
                          uninsured status in their annual Current
                          Population Surveys on these topics.
                         For FYs 1998 through 2000, the Number of
                          Children is equal to the number of low-income
                          children in each State with no health
                          insurance for the fiscal year. For FY 2001,
                          the Number of Children is equal to the sum of
                          75 percent of the number of low-income
                          children in the State with no health insurance
                          and 25 percent of the number of low-income
                          children in the State. This is also based on a
                          3-year average of Census data. For FY 2002 and
                          succeeding years, the Number of Children is
                          equal to the sum of 50 percent of the number
                          of low-income children in the State with no
                          health insurance and 50 percent of the number
                          of low-income children in the State. This is
                          also based on a 3-year average of Census data.
Column C =               State Cost Factor. The State Cost Factor for a
                          State is equal to the sum of: .15, and .85
                          multiplied by the ratio of the annual average
                          wages in the health industry per employee for
                          the State to the annual wages per employee in
                          the health industry for the 50 States and the
                          District of Columbia. The State Cost Factor
                          for each State was calculated based on such
                          wage data for each State as reported,
                          determined, and provided to HCFA by the BLS in
                          the Department of Labor for 1993, 1994, and
                          1995.

[[Page 6106]]

 
Column D =               Product. The Product for each State was
                          calculated by multiplying the Number of
                          Children in Column B by the State Cost Factor
                          in Column C. The sum of the Products for all
                          50 States and the District of Columbia is
                          below the Products for each State in Column D.
                          The Product for each State and the sum of the
                          Products for all States provides the basis for
                          allotment to States.
Column E =               Percent Share of Total. This is the calculated
                          percentage share for each State of the total
                          allotment available to the 50 States and the
                          District of Columbia. The Percent Share of
                          Total is calculated as the ratio of the
                          Product for each State in Column D to the sum
                          of the products for all 50 States and the
                          District of Columbia below the Products for
                          each State in Column D.
Column F =               Allotment. This is the State Child Health
                          Program allotment for each State,
                          Commonwealth, or Territory. For each of the 50
                          States and the District of Columbia, this is
                          determined as the Percent Share of Total in
                          Column E for the State multiplied by the total
                          amount available for allotment for the 50
                          States and the District of Columbia for the
                          fiscal year.
                         For each of the Commonwealths and Territories,
                          the allotment is determined as the Percent
                          Share of Total in Column E multiplied by the
                          total amount available for allotment to the
                          Commonwealths and Territories. For the
                          Commonwealths and Territories, the Percent
                          Share of Total in Column E is specified in
                          section 2104(c) of the Act. For FY 1999, the
                          Commonwealth and Territories were allotted an
                          additional $32 million, which is added to the
                          total allotment available to the territories
                          for FY 1999 determined by the formula
                          described above. The total amount is then
                          allotted to the Commonwealths and Territories
                          according to the percentages specified in
                          section 2104 of the Act.
------------------------------------------------------------------------


               State Children's Health Insurance Program Reserved Allotments for Fiscal Year: 1998
----------------------------------------------------------------------------------------------------------------
                                            Number of                               Percent
                  State                      children    State cost    Product      share of     Allotment \1\
                                              (000)        factor                  totals \3\
(A)                                                (B)          (C)          (D)          (E)                (F)
----------------------------------------------------------------------------------------------------------------
ALABAMA..................................          154       0.9510       146.46         2.04        $85,975,213
ALASKA...................................           11       1.0669        11.74         0.16          6,889,296
ARIZONA..................................          190       1.0472       198.97         2.76        116,797,799
ARKANSAS.................................           92       0.8871        81.61         1.13         47,907,958
CALIFORNIA...............................        1,281       1.1365     1,455.92        20.23        854,644,807
COLORADO.................................           72       0.9888        71.19         0.99         41,790,547
CONNECTICUT..............................           53       1,1237        59.55         0.83         34,959,075
DELAWARE.................................           13       1.0553        13.72         0.19          8,053,463
DISTRICT OF COLUMBIA.....................           16       1.2857        20.57         0.29         12,076,002
FLORIDA..................................          444       1.0368       460.32         6.40        270,214,724
GEORGIA..................................          214       0.9923       212.36         2.95        124,660,136
HAWAII...................................           13       1.1722        15.24         0.21          8,945,304
IDAHO....................................           31       0.8726        27.05         0.38         15,879,707
ILLINOIS.................................          211       0.9892       208.73         2.90        122,528,573
INDIANA..................................          131       0.9169       120.12         1.67         70,512,432
IOWA.....................................           67       0.8253        55.30         0.77         32,460,463
KANSAS...................................           60       0.8704        52.22         0.73         30,656,520
KENTUCKY.................................           93       0.9146        85.06         1.18         49,932,527
LOUISIANA................................          194       0.8934       173.31         2.41        101,736,841
MAINE....................................           24       0.8863        21.27         0.30         12,486,977
MARYLAND.................................          100       1.0498       104.98         1.46         61,627,358
MASSACHSETTS.............................           69       1.0576        72.97         1.01         42,836,231
MICHIGAN.................................          156       1.0001       156.02         2.17         91,585,508
MINNESOTA................................           50       0.9675        48.37         0.67         28,395,980
MISSISSIPPI..............................          110       0.8675        95.43         1.33         56,017,103
MISSOURI.................................           97       0.9075        88.03         1.22         51,673,123
MONTANA..................................           24       0.8333        20.00         0.28         11,740,395
NEBRASKA.................................           30       0.8440        25.32         0.35         14,862,926
NEVADA...................................           43       1.2046        51.80         0.72         30,407,067
NEW HAMPSHIRE............................           20       0.9760        19.52         0.27         11,458,404
NEW JERSEY...............................          134       1.1241       150.62         2.09         88,417,899
NEW MEXICO...............................          117       0.9169       107.28         1.49         62,972,705
NEW YORK.................................          399       1.0914       435.47         6.05        255,626,409
NORTH CAROLINA...........................          138       0.9815       135.45         1.88         79,508,462
NORTH DAKOTA.............................           10       0.8587         8.59         0.12          5,040,741
OHIO.....................................          205       0.9617       197.16         2.74        115,734,364
OKLAHOMA.................................          170       0.8588       145.99         2.03         85,699,061
OREGON...................................           67       0.9947        66.65         0.93         39,121,663
PENNSYLVANIA.............................          200       1.0005        200.9         2.78        117,456,521
RHODE ISLAND.............................           19       0.9580        18.20         0.25         10,684,422
SOUTH CAROLINA...........................          110       0.9843       108.27         1.50         63,557,819
SOUTH DAKOTA.............................           17       0.8559        14.55         0.20          8,541,224
TENNESSEE................................          115       0.9799       112.69         1.57         66,153,082
TEXAS....................................        1,031       0.9275       956.25        13.29        561,331,521

[[Page 6107]]

 
UTAH.....................................           46       0.8977        41.30         0.57         24,241,159
VERMONT..................................            7       0.8604         6.02         0.08          3,535,445
VIRGINIA.................................          118       0.9862       116.38         1.62         68,314,915
WASHINGTON...............................           85       0.9352        79.49         1.10         46,661,213
WEST VIRGINIA............................           45       0.8937        40.21         0.56         23,606,744
WISCONSIN................................           75       0.9229        69.22         0.96         40,633,039
WYOMING..................................           15       0.9858        13.14         0.18          7,711,638
----------------------------------------------------------------------------------------------------------------
    TOTAL STATES ONLY....................  ...........  ...........     7,196.17       100.00      4,224,262,500
----------------------------------------------------------------------------------------------------------------
ALLOTMENTS FOR COMMONWEALTHS AND
 TERRITORIES \2\
PUERTO RICO..............................  ...........  ...........  ...........        91.60          9,835,550
GUAM.....................................  ...........  ...........  ...........         3.50            375,813
VIRGIN ISLANDS...........................  ...........  ...........  ...........         2.60            279,175
AMERICA SAMOA............................  ...........  ...........  ...........         1.20            128,850
N. MARIANA ISLANDS.......................  ...........  ...........  ...........         1.10            118.113
----------------------------------------------------------------------------------------------------------------
    TOTAL COMMONWEALTHS AND TERRITORIES
     ONLY................................  ...........  ...........  ...........       100.00         10,737,500
----------------------------------------------------------------------------------------------------------------
    TOTAL STATES AND COMMONWEALTH AND
     TERRITORIES.........................  ...........  ...........  ...........  ...........      4,235,000,000
----------------------------------------------------------------------------------------------------------------
Footnotes:
(1) Total amount available for allotment to the 50 States and the District of Columbia is $4,224,262,500;
  determined as the fiscal year appropriation ($4,295,000,000) reduced by the total amount available for
  allotment to the Commonwealths and Territories ($10,737,500) and amounts for Special Diabetes Grants
  ($60,000,000) under sections 4921 and 4922 of BBA.
(2) Total amount available for allotment to the Commonwealths and Territories is $10,737,500; determined as .25
  percent of the fiscal year appropriation ($4,295,000,000).
(3) Percent share of total amount for allotment to the Commonwealths and Territories is as specified in section
  2104(c) of the Social Security Act.


               State Children's Health Insurance Program Reserved Allotments for Fiscal Year: 1999
----------------------------------------------------------------------------------------------------------------
                                            Number of                               Percent
                  State                      children    State cost    Product      share of     Allotment \1\
                                              (000)        factor                  total \3\
(A)                                                (B)          (C)          (D)          (E)                (F)
----------------------------------------------------------------------------------------------------------------
ALABAMA..................................          154       0.9510       146.46         2.04        $85,569,176
ALASKA...................................           11       1.0669        11.74         0.16          6,856,760
ARIZONA..................................          190       1.0472       198.97         2.76        116,246,196
ARKANSAS.................................           92       0.8871        81.61         1.13         47,681,702
CALIFORNIA...............................        1,281       1.1365     1,455.92        20.23        850,608,561
COLORADO.................................           72       0.9888        71.19         0.99         41,593,182
CONNECTICUT..............................           53       1.1237        59.55         0.83         34,793,973
DELAWARE.................................           13       1.0553        13.72         0.19          8,015,429
DISTRICT OF COLUMBIA.....................           16       1.2857        20.57         0.29         12,018,971
FLORIDA..................................          444       1.0368       460.32         6.40        268,938,576
GEORGIA..................................          214       0.9923       212.36         2.95        124,071,402
HAWAII...................................           13       1.1722        15.24         0.21          8,903,057
IDAHO....................................           31       0.8726        27.05         0.38         15,804,712
ILLINOIS.................................          211       0.9892       208.73         2.90        121,949,905
INDIANA..................................          131       0.9169       120.12         1.67         70,179,422
IOWA.....................................           67       0.8253        55.30         0.77         32,307,161
KANSAS...................................           60       0.8704        52.22         0.73         30,511,738
KENTUCKY.................................           93       0.9146        85.06         1.18         49,696,709
LOUISIANA................................          194       0.8934       173.31         2.41        101,256,366
MAINE....................................           24       0.8863        21.27         0.30         12,428,004
MARYLAND.................................          100       1.0498       104.98         1.46         61,363,309
MASSACHUSETTS............................           69       1.0576        72.97         1.01         42,633,928
MICHIGAN.................................          156       1.0001       156.02         2.17         91,152,976
MINNESOTA................................           50       0.9675        48.37         0.67         28,261,873
MISSISSIPPI..............................          110       0.8675        95.43         1.33         55,752,550
MISSOURI.................................           97       0.9075        88.03         1.22         51,429,086
MONTANA..................................           24       0.8333        20.00         0.28         11,684,948
NEBRASKA.................................           30       0.8440        25.32         0.35         14,792,733
NEVADA...................................           43       1.2046        51.80         0.72         30,263,463
NEW HAMPSHIRE............................           20       0.9760        19.52         0.27         11,404,289
NEW JERSEY...............................          134       1.1241       150.62         2.09         88,000,326

[[Page 6108]]

 
NEW MEXICO...............................          117       0.9169       107.28         1.49         62,675,303
NEW YORK.................................          399       1.0914       435.47         6.05        254,419,158
NORTH CAROLINA...........................          138       0.9815       135.45         1.88         79,132,966
NORTH DAKOTA.............................           10       0.8587         8.59         0.12          5,016,935
OHIO.....................................          205       0.9617       197.16         2.74        115,187,783
OKLAHOMA.................................          170       0.8588       145.99         2.03         85,294,328
OREGON...................................           67       0.9947        66.65         0.93         38,936,902
PENNSYLVANIA.............................          200       1.0005       200.09         2.78        116,901,807
RHODE ISLAND.............................           19       0.9580        18.20         0.25         10,633,962
SOUTH CAROLINA...........................          110       0.9843       108.27         1.50         63,257,653
SOUTH DAKOTA.............................           17       0.8559        14.55         0.20          8,500,886
TENNESSEE................................          115       0.9799       112.69         1.57         65,840,660
TEXAS....................................        1,031       0.9275       956.25        13.29        558,680,510
UTAH.....................................           46       0.8977        41.30         0.57         24,126,675
VERMONT..................................            7       0.8604         6.02         0.08          3,518,748
VIRGINIA.................................          118       0.9862       116.38         1.62         67,992,282
WASHINGTON...............................           85       0.9352        79.49         1.10         46,440,845
WEST VIRGINIA............................           45       0.8937        40.21         0.56         23,495,256
WISCONSIN................................           75       0.9229        69.22         0.96         40,441,141
WYOMING..................................           15       0.8758        13.14         0.18          7,675,218
                                          ----------------------------------------------------------------------
    TOTAL STATES ONLY....................  ...........  ...........     7,196.17       100.00      4,204,312,500
                                          ----------------------------------------------------------------------
ALLOTMENTS FOR COMMONWEALTHS AND
 TERRITORIES:\2\
    PUERTO RICO..........................  ...........  ...........  ...........        91.60         39,101,750
    GUAM.................................  ...........  ...........  ...........         3.50          1,494,063
    VIRGIN ISLANDS.......................  ...........  ...........  ...........         2.60          1,109,875
    AMERICAN SAMOA.......................  ...........  ...........  ...........         1.20            512,250
    N. MARIANA ISLANDS...................  ...........  ...........  ...........         1.10            469,563
                                          ----------------------------------------------------------------------
TOTAL COMMONWEALTHS AND TERRITORIES ONLY.  ...........  ...........  ...........       100.00         42,687,500
                                          ----------------------------------------------------------------------
TOTAL STATES AND COMMONWEALTH AND
 TERRITORIES.............................  ...........  ...........  ...........  ...........     4,247,000,000
----------------------------------------------------------------------------------------------------------------
Footnotes:
(1) Total amount available for allotment to the 50 States and the District of Columbia is $4,204,312,500;
  determined as the fiscal year appropriation ($4,275,000,000) reduced by the total amount available for
  allotment to the Commonwealths and Territories ($10,687,500) and amounts for Special Diabetes Grants
  ($60,000,000) under sections 4921 and 4922 of BBA.
(2) Total amount available for allotment to the Commonwealths and Territories is $42,687,500; determined as
  $10,687,500 (.25 percent of $4,275,000,000, the fiscal year appropriation) plus $32,000,000.
(3) Percent share of total amount available for allotment to the Commonwealths and Territories is as specified
  in section 2104(c) of the Social Security Act.

V. Impact Statement

    HCFA has examined the impact of this notice as required by 
Executive Order 12866. Executive Order 12866 directs agencies to assess 
all costs and benefits of available regulatory alternatives and, when 
rules are necessary, to select regulatory approaches that maximize net 
benefits (including potential economic environments, public health and 
safety, other advantages, distributive impacts, and equity). We believe 
that this notice is consistent with the regulatory philosophy and 
principles identified in the Executive Order.
    This notice merely provides notification of the reserved FY 1998 
and FY 1999 State CHIP allotments available to provide Federal funding 
to individual States, Commonwealths, and Territories for expenditures 
in the new Children's Health Insurance Program and the assumption and 
methodology that HCFA used to determine these reserved allotments. The 
formula for State allotments is specified in the statute. This notice 
by itself has no economic impact. Final State CHIP allotments for each 
State will be calculated using the statutory formula and may vary from 
these reserved amounts depending upon the number of States that submit 
approved State plans under title XXI. (As noted above, the allotment 
process will be set forth in more detail in future rulemaking.)
    We believe this notice will have an overall positive impact by 
informing States of the extent to which they will be permitted to 
expend funds under approved State child health plans in FY 1998 and FY 
1999. States will be able to conduct advance planning necessary for 
implementation of the State Child Health Insurance Program if they 
choose, beginning October 1, 1997.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

(Section 1102 of the Social Security Act (42 U.S.C. 1302)

(Catalog of Federal Domestic Assistance Program No. 00.000, State 
Children's Health Insurance Program)

    Dated: December 18, 1998.
Nancy Ann Min DeParle,
Administrator, Health Care Financing Administration.

    Dated: January 5, 1999.
Donna E. Shalala,
Secretary.
[FR Doc. 99-2859 Filed 2-5-99; 8:45 am]
BILLING CODE 4120-01-P