Each year, the President is required to submit a comprehensive federal budget proposal to Congress no later than the first Monday in February. Once it is submitted, the Congressional Budget Office (CBO) analyzes the proposal using its own economic assumptions and estimation techniques. The House and Senate Budget Committees then develop their respective budget resolutions after reviewing the President's budget, the views of other committees, and information from CBO. Differences between the houses are supposed to be resolved by April 15, but this deadline is rarely met. Although it is not binding, the resolution provides a framework for subsequent legislative action. This report provides information on Medicaid and the State Children's Health Insurance Program (SCHIP). It will be updated to reflect relevant activity until the FY2009 budget is passed and until the next President's FY2010 budget is released. Congressional Research Service (CRS) staff contact information by topic area is provided in Table 2 at the end of the report. The President's FY2009 budget contains a number of proposals that would affect Medicaid and SCHIP. Some are program expansions, and others are designed to reduce federal spending. For each proposal, this report provides: background; a description of the proposal based on available information; and a list of relevant CRS reports. As shown in Table 1 , some of the President's proposals would require legislative action, while others would be implemented administratively (e.g., via regulatory changes, issuance of program guidance, etc.). In their analyses of the President's budget, both CBO and executive branch agencies such as HHS and the Office of Management and Budget (OMB) provide baseline (current law) estimates of Medicaid and SCHIP spending along with estimated costs and savings of proposed changes. However, CBO and the executive branch differ in their treatment of legislative and administrative proposals. In executive branch documents describing the President's budget, implementation of proposed administrative changes is assumed in estimates of baseline Medicaid and SCHIP spending, and estimates for legislative proposals are presented separately. In general, CBO assesses the likelihood that a particular administrative action will take place before adjusting its baseline, and only provides separate estimates for legislative proposals. For this reason and others, CBO and executive branch estimates of Medicaid and SCHIP spending differ. Background. The Deficit Reduction Act of 2005 (DRA, P.L. 109-171 ) amended the Social Security Act to exclude from Medicaid eligibility for nursing facility or other long-term care services, certain individuals with an equity interest in their home of greater than $500,000. Under DRA, the state may elect without regard to Medicaid's requirements concerning statewideness and comparability, to substitute an amount that exceeds $500,000, but does not exceed $750,000. These dollar amounts are increased, beginning in 2011, from year-to-year based on the percentage increase in the consumer price index (CPI) for all urban consumers (all items, United States city average), rounded to the nearest $1,000. The Secretary establishes a process for waiving this provision in the case of a demonstrated hardship. The homes of individuals whose spouse, child under age 21, or child who is blind or disabled (as defined by the Section 1614 of the Social Security Act) and lawfully resides in the individual's home are excluded. Proposal. The President's budget seeks legislation that would limit the allowable home equity amount to $500,000 for all states by eliminating the state option to increase the equity limit to a number between $500,000 and $750,000. Starting in 2011, this limit would be adjusted by the CPI inflation factor. HHS estimates that the proposal would save $80 million in FY2009, and $480 million over the FY2009-FY2013 period. Reports. For more information about home equity and Medicaid eligibility, see CRS Report RL33593, Medicaid Coverage for Long-Term Care: Eligibility, Asset Transfers, and Estate Recovery , by [author name scrubbed]. For information on DRA's change to eligibility rules for counting home equity, see CRS Report RL33251, Side-by-Side Comparison of Medicare, Medicaid, and SCHIP Provisions in the Deficit Reduction Act of 2005 , by [author name scrubbed] et al. (pdf) Background. Eligibility for Medicaid's long-term care services, such as nursing home care or a range of home- and community-based supportive services, is limited to beneficiaries who meet state-designed assessments for functional need and financial standards. The assessment for functional need examines physical and/or cognitive functioning that evaluates whether applicants would require the level of care provided in an institution (e.g., a nursing facility, intermediate care facility for the mentally retarded, or a hospital). Financial standards refer to a variety of optional eligibility pathways, including pathways that allow states to cover people with long-term care needs who have income above 74% of the federal poverty level (FPL), which is equivalent to the level of cash payments under the Supplemental Security income program. Beneficiaries who are enrolled in Medicaid, because they need long-term care services, also are generally entitled to a range of acute care benefits (e.g., hospital care, physician services, rehabilitation, private duty nursing, home health services, case management, among many others) that a state offers, as long as these services are medically necessary. For dual eligibles, individuals enrolled in both Medicare and Medicaid, Medicaid covers just those acute care services that are not covered by Medicare, often referred to as wrap around services. Proposal. The President's budget would establish a state plan amendment option to allow states to offer a modified benefit package of acute care services for selected long-term care beneficiaries. States would be given the authority under this provision to expand on the DRA-flexibility to adapt private sector health insurance benefit packages to better meet the needs of specific Medicaid beneficiary groups. The DRA option is modeled on benefit packages available under SCHIP (i.e., FEHBP preferred provider option, coverage for state employees, the largest commercial HMO in a state, or Secretary-approved coverage). HHS estimates that by redesigning acute care benefits, Medicaid would save $20 million in FY2009 and $650 million over the FY2009-FY2013 period. Reports. Currently, no other CRS reports address this topic. Background. To control costs and quality of care, many states contract with managed care organizations to deliver services to Medicaid beneficiaries. These arrangements can include contracts with health maintenance organizations (HMOs), primary care case management (PCCM) programs, and pre-paid health plans (PHPs), which vary in the comprehensiveness of services they provide and the degree of financial risk assumed in the managed care contracts. Prior to the Balanced Budget Act of 1997 (BBA, P.L. 105-33 ), federal Medicaid laws contained provisions that limited states' ability to use managed care, including requirements regarding freedom of choice of provider for beneficiaries, statewideness (i.e., all covered services must be available statewide), and comparability (i.e., the amount, duration and scope of any services available to one individual must be available to all individuals in the same eligibility category). Special waivers were required to override these rules. BBA added Section 1932 to the Medicaid statute. This provision gave states the option of requiring Medicaid beneficiaries covered under states' Medicaid plans to enroll with a managed care entity without a waiver. Specific groups, identified in Section 1932(a)(2) were exempted from mandatory enrollment in managed care, including children under age 19 with special health care needs, defined as: those eligible for the Supplement Security Income or SSI program, children eligible for the Title V Maternal and Child Health Block Grant program, children under 18 who meet the SSI disability standards who require institutional care, but receive care outside the institution, and for whom the cost of that care does not exceed institutional care (also known as Katie Beckett or TEFRA children), and those receiving foster care or adoption assistance under Title IV-E or who are in foster care or otherwise in an out-of-home placement. Other exempted groups include individuals who are dually eligible for Medicare and Medicaid. Indians are also exempted from mandatory enrollment in Medicaid managed care plans, unless the participating managed care entity is the Indian Health Service, or certain Indian Health Programs operated by Indian tribes, tribal organizations, or urban Indian organizations. Proposal. The President's FY2009 Budget repeals Section 1932(a)(2). This change would allow states to require the currently exempted populations identified above to enroll in Medicaid managed care programs covered under Medicaid state plans. HHS estimates that by repealing the Section 1932(a)(2) special rules, Medicaid would save $100 million in FY2009 and $2.1 billion over the FY2009-2013 period. Reports. Currently, no other CRS reports address this topic. For a general overview of managed care under Medicaid, see CRS Report RL33711, Medicaid Managed Care: An Overview and Key Issues for Congress , by [author name scrubbed]. Background. Section 1915(b) of the Social Security Act gives the Secretary of HHS the authority to waive certain Medicaid program requirements (including statewideness, comparability of services, and freedom of choice of provider) to allow states to establish mandatory managed care programs that restrict the providers from whom a beneficiary may obtain covered services, or that create a "carve out" delivery system for specialty care as long as such programs do not reduce beneficiary access and quality of care. Section 1915(b) waiver programs are generally approved for a two-year period and must be cost effective (cannot cost more than what the Medicaid program would have cost without the waiver).