How are responsibilities divided between the federal government and the states?
The first four issues raise questions about the role of government as a market organizer, market regulator, and financier. The federal government, the states, or some combination of the two can conduct each of these functions. Maintaining a balance acceptable to states and the federal government is a difficult political art. The challenge is significant regardless of the broad approach taken to increasing coverage. SCHIP. The enactment of SCHIP in 1997 introduced a new approach to federalism as it applies to incremental coverage expansions.22 Compared with the Medicaid program, SCHIP relies more heavily on federal funds but leaves more design issues to the states. While areas of conflict between the states and the federal government remain, the program retains a broad base of political support at both levels of government.23 However, efforts to expand SCHIP with higher eligibility levels and possible inclusion of adults may raise federalism problems. These proposals would build upon a
