State Children's Health Insurance Program; Reserved Allotments to States for Fiscal Year 1998; Enhanced Federal Medical Assistance Percentages

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

[MB-115-N]

RIN 0938-AI23

State Children's Health Insurance Program; Reserved Allotments to

States for Fiscal Year 1998; Enhanced Federal Medical Assistance

Percentages

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

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This notice provides advance notification of the reserved

fiscal year (FY) 1998 State allotments available to provide Federal

funding to individual States, Commonwealths, and Territories for

expenditures in the new State Children's Health Insurance Program

established under title XXI of the Social Security Act. The notice also

describes the methodology and process that HCFA used to determine these

reserved allotments in accordance with section 2104 of the Act. These

reserved State allotments are estimates of States' FY 1998 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

a State's allotment for a fiscal year is available for 3 years for

States with approved child health plans.

This notice also specifies the enhanced Federal medical assistance

percentages (FMAP) for child health assistance provided under Title XXI

for fiscal year 1998.

Established by section 4901 of the Balanced Budget Act of 1997

(Pub. L. 105-33), the State Children's Health Insurance Program will

provide 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

document, send your request to: New Orders, Superintendent of

Documents, P.O. Box 37194, Pittsburgh, PA 15250-7954. Specify the date

of the issue requested and enclose a check or money order payable to

the Superintendent of Documents, or enclose your Visa or Master Card

number and expiration date. Credit card orders can also be placed by

calling the order desk at (202) 512-1800 or by faxing to (202) 512-

2250. The cost for each copy is $8.00. As an alternative, you can view

and photocopy the Federal Register document at most libraries

designated as Federal Depository Libraries and at many other public and

academic libraries throughout the country that receive the Federal

Register.

This Federal Register document is also available from the Federal

Register online database through GPO Access, a service of the U.S.

Government Printing Office. Free public access is available on a Wide

Area Information Server (WAIS) through the Internet and via

asynchronous dial-in. Internet users can access the database by using

the World Wide Web; the Superintendent of Documents home page address

is http://www.access.gpo.gov/su__docs/, by using local WAIS client

software, or by telnet to swais.access.gpo.gov, then login as guest (no

password required). Dial-in users should use communications software

and modem to call (202) 512-1661; type swais, then login as guest (no

password required).

FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.

SUPPLEMENTARY INFORMATION:

I. General Background on New Legislation

Section 490l of the Balanced Budget Act of 1997 (BBA, Pub. L. 105-

33,

[[Page 48099]]

signed into law on August 5, 1997), amended the Social Security Act

(the Act) to add a new title XXI. Under title XXI, a new State

Children's Health Insurance Program is established to assist State

efforts to initiate and expand child health assistance to uninsured,

low-income children. Under the program, child health assistance is to

be provided primarily for obtaining health benefits coverage through

(1) Providing 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 State

Children's Health Insurance Program, 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 advance notification to

States, Commonwealths, and Territories of the reserved allotments that

will be available to them for FY 1998 for child health insurance

expenditures if they choose to establish a State Children's Health

Insurance Program under an approved State child health plan under title

XXI of the Act, or to claim an enhanced FMAP rate for certain Medicaid

expenditures under title XIX of the Act as specified in title XXI.

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 is necessary to enable States,

Commonwealths, and Territories to conduct advance planning and

budgeting.

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.'' We believe that this language requires States to have an

approved State child health plan for the fiscal year in order for the

Secretary to provide a final allotment to that State for that fiscal

year. We believe that if a State does not have an approved State child

health plan for that fiscal year, the amount of that State's reserved

allotment would be unavailable to that State and would be included in

the final allotments for States with approved child health plans.

The reserved allotment amounts 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. 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), 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 approval health plans based on

these reserved allotments. All 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 Table I under section IV the reserved FY

1998 allotments 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. We have

applied the applicable statutory formula specified in section 2104 of

the Act in determining the reserved allotments for FY 1998, 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: $4.275 billion for each FY 1998

through 2001; $3.15 billion for each FY 2002 through 2004; $4.05

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. This total amount is

allotted among 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 the BBA, 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 FY

1998 through FY 2002 only.

The total amount of the allotment available for the 50 States and

the District of Columbia for FY 1998 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 $4,275,000,000.

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 $4,275,000,000=$10,687,500

D4921=Amount of grant for research regarding Type I Diabetes

under section 4921 of the BBA. This is $30,000,000 for FYs 1998 through

2002.

D4922=Amount of grant for diabetes programs for Indians

under section 4922 of the BBA. This is $30,000,000 for FYs 1998 through

2002.

Therefore, for FY 1998 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

[[Page 48100]]

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 only on the total number of low-income, uninsured

children in the State. 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.

For FY 1998 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 Current Population Survey

(1994, 1995, and 1996) prior to FY 1998. Because of time constraints we

are using Bureau of Census data obtained prior to September 1, 1997.

These data refer to information for calendar years 1993, 1994, and

1995, respectively, and 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 not

reported to be 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 Reports on these

topics. As part of a continuing formal process between HCFA and the

Bureau of the Census, each fiscal year HCFA will obtain such Number of

Children data officially from the Bureau of the Census.

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 each of the most

recent 3 years before the beginning of the fiscal year. Because of time

constraints we are using BLS data obtained prior to September 1, 1997.

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, 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. The formula for

determining each State's reserved allotment for FY 1998 of the total

available allotment is:

[GRAPHIC] [TIFF OMITTED] TN12SE97.000

Sai=Allotment for State i.

Ci=Number of Children. This is the number of certain low-

income children in State i as officially reported, defined, and

provided to HCFA by the Bureau of the Census. For FY 1998, 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 State i (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 State i.

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.

(CixSCFi)=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 $4,204,312,500.

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 in 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 notice of proposed rulemaking 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 FY 1998 so that States

can begin to plan operation, if they chose to establish a State

children's health insurance program under title XXI, effective October

1, 1997. No payments may be made from these allotments until a State

has an approved State child health plan under title XXI.

[[Page 48101]]

In developing the reserved allotment amounts for FY 1998, we

applied the following principles, upon which we will be inviting public

comment during the rulemaking process.

For each fiscal year for FY 1998 through FY 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. 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.

IV. Table of Reserved State Children's Health Insurance Program

Allotments for FY 1998

Key to Table 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 three most recent March supplements to the Current

Population Survey. 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 Reports on

these topics.

For FYS 1998-2000, 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 each of the most recent 3 years before the beginning of the fiscal

year.

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.

State Children's Health Insurance Program Allotments for Fiscal Year: 1998

A B C D E F

State Number of

low-income

children

(000) State cost

factor Product Percent

share of

total (1) Allotment (3)

----------------------------------------------------------------------------------------------------------------

Alabama.................................. 154 0.9510 146.46 2.05 $85,997,312

Alaska................................... 9 1.0669 9.60 0.13 5,638,146

Arizona.................................. 184 1.0472 192.69 2.69 113,138,521

Arkansas................................. 90 0.8871 79.84 1.12 46,878,527

California............................... 1,281 1.1365 1,455.92 20.33 854,864,484

Colorado................................. 72 0.9888 71.19 0.99 41,801,288

Connecticut.............................. 53 1.1237 59.55 0.83 34,968,061

Delaware................................. 13 1.0553 13.72 0.19 8,055,533

District of Columbia..................... 16 1.2857 20.57 0.29 12,079,106

Florida.................................. 444 1.0368 460.32 6.43 270,284,180

Georgia.................................. 214 0.9923 212.36 2.97 124,692,179

Hawaii................................... 13 1.1722 15.24 0.21 8,947,603

Idaho.................................... 31 0.8726 27.05 0.38 15,883,789

Illinois................................. 211 0.9892 208.73 2.92 122,560,067

[[Page 48102]]

Indiana.................................. 131 0.9169 120.12 1.68 70,530,557

Iowa..................................... 67 0.8253 55.30 0.77 32,468,807

Kansas................................... 60 0.8704 52.22 0.73 30,664,400

Kentucky................................. 93 0.9146 85.06 1.19 49,945,361

Louisiana................................ 194 0.8934 173.31 2.42 101,762,991

Maine.................................... 24 0.8863 21.27 0.30 12,490,186

Maryland................................. 100 1.0498 104.98 1.47 61,643,199

Massachusetts............................ 69 1.0576 72.97 1.02 42,847,242

Michigan................................. 156 1.0001 156.02 2.18 91,609,050

Minnesota................................ 50 0.9675 48.37 0.68 28,403,279

Mississippi.............................. 110 0.8675 95.43 1.33 56,031,502

Missouri................................. 97 0.9075 88.03 1.23 51,686,405

Montana.................................. 20 0.8333 16.67 0.23 9,786,177

Nebraska................................. 30 0.8440 25.32 0.35 14,866,746

Nevada................................... 43 1.2046 51.80 0.72 30,414,882

New Hampshire............................ 20 0.9760 19.52 0.27 11,461,349

New Jersey............................... 134 1.1241 150.62 2.10 88,440,626

New Mexico............................... 107 0.9169 98.11 1.37 57,605,226

New York................................. 399 1.0914 435.47 6.08 255,692,115

North Carolina........................... 138 0.9815 135.45 1.89 79,528,899

North Dakota............................. 10 0.8587 8.59 0.12 5,042,037

Ohio..................................... 205 0.9617 197.16 2.75 115,764,112

Oklahoma................................. 161 0.8588 138.26 1.93 81,182,913

Oregon................................... 67 0.9947 66.65 0.93 39,131,718

Pennsylvania............................. 200 1.0005 200.09 2.79 117,486,712

Rhode Island............................. 19 0.9580 18.20 0.25 10,687,168

South Carolina........................... 110 0.9843 108.27 1.51 63,574,155

South Dakota............................. 15 0.8559 12.84 0.18 7,538,311

Tennessee................................ 115 0.9799 112.69 1.57 66,170,086

Texas.................................... 1,031 0.9275 956.25 13.35 561,475,805

Utah..................................... 46 0.8977 41.30 0.58 24,247,390

Vermont.................................. 7 0.8604 6.02 0.08 3,536,354

Virginia................................. 118 0.9862 116.38 1.63 68,332,474

Washington............................... 85 0.9352 79.49 1.11 46,673,207

West Virginia............................ 45 0.8937 40.21 0.56 23,612,812

Wisconsin................................ 71 0.9229 65.53 0.92 38,475,831

Wyoming.................................. 15 0.8758 13.14 0.18 7,713,620

----------------------------------------------------------------------

Total States Only.................. ........... ........... 7,160.35 100.00 4,204,312,500

Allotments for Commonwealths and

Territories (2):

Puerto Rico.......................... ........... ........... ........... 91.60 9,789,750

Guam................................. ........... ........... ........... 3.50 374,063

Virgin Islands....................... ........... ........... ........... 2.60 277,875

American Samoa....................... ........... ........... ........... 1.20 128,250

N. Mariana Islands................... ........... ........... ........... 1.10 117,563

----------------------------------------------------------------------

Total Commonwealths and Territories

Only.............................. ........... ........... ........... 100.00 10,687,500

======================================================================

Total States and Commonwealths and

Territories....................... ........... ........... ........... ........... 4,215,000,000

----------------------------------------------------------------------------------------------------------------

Footnotes:

1 Total amount available for allotment to the 50 States and the District of Columbia is $4,204,312,500;

determined as the FY 1998 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 $10,687,500; determined as .25

percent of the FY 1998 appropriation ($4,275,000,000).

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. Calculation of Enhanced Federal Medical Assistance Percentage

In accordance with formulas in sections 1101(a)(8) and 1905(b) of

the Act, the Secretary each year calculates and publishes the ``Federal

percentages'' and ``Federal medical assistance percentages'' (FMAP)

that are used in determining the amount of Federal matching in State

welfare and medical assistance expenditures. Section 2105(b) of title

XXI provides for an ``enhanced FMAP'' for child health assistance

provided under title XXI that is equal to the current FMAP for fiscal

year in the Medicaid Title XIX program, increased by 30 percent of the

difference between 100 and the current FMAP for that fiscal year. The

enhanced FMAP may not exceed 85 percent.

[[Page 48103]]

The FMAPs for each State and Commonwealth and Territory for the

title XIX Medicaid program that are applicable for FY 1998 have already

been published in the Federal Register (on January 29, 1997, 62 FR

4293). We are republishing the FY 1998 FMAPs in Table II, along with

the enhanced FMAP for the State Children's Health Insurance Program,

computed in accordance with the formula specified in section 2105(b) of

the Act.

Key to Table I

Column/Description

Column A = State. This contains the name of the State,

Commonwealth, or Territory.

Column B = Federal Medical Assistance Percentages FY 1998. This

contains the title XIX FMAPs, previously published in the Federal

Register (January 29, 1997, 62 FR 4293).

Column C = Amount of FMAP Increase. This contains the amount of the

FMAP increase calculated as 30 percent of the difference between 100

percent and the title XIX FMAP rate in Column B.

Column D = Enhanced FMAP FY 1998. This is the title XXI enhanced

FMAP rate specified at section 2105(b) of the Act. The enhanced FMAP is

limited to no more than 85 percent.

BILLING CODE 4120-01-P

[[Page 48104]]

[GRAPHIC] [TIFF OMITTED] TN12SE97.001

BILLING CODE 4120-01-C

[[Page 48105]]

VI. 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 advance notification of the reserved FY

1998 State 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 allotments 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 rule making.)

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. 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)

Dated: September 8, 1997.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: September 9, 1997.

Donna E. Shalala,

Secretary.

[FR Doc. 97-24324 Filed 9-10-97; 8:45 am]

BILLING CODE 4120-01-P