The State Children's Health Insurance Program (SCHIP) offers federal matching funds for states and territories to provide health insurance to uninsured, low-income children in families whose annual incomes are too high to qualify for Medicaid. Unlike Medicaid, which operates as an individual entitlement, SCHIP operates as a capped grant program. Allotment of funds among states is determined by a formula set in law. Once a state depletes a given year's original allotment, other than funds from prior years made available through redistribution, no additional federal funds will be made available to that state for that year. States have the flexibility to design their programs to operate within these funding constraints. The allotment and redistribution methods under current law have been incompatible with state spending patterns to date.