Last week I discussed the legislative fixes being made to save half a million kids from being dropped from the Healthy Families rolls.  This fix would push more costs onto the families, making the program less affordable and the coverage stingier, and would extend a gross premiums tax on insurance companies, which was set to phase out in October, at a lower rate than they are now paying.  Keeping that tax at the same rate would have spared families from increased premiums and co-pays.

But saving the program is saving the program, and yesterday the State Senate took the first step.

State lawmakers pushed forward Wednesday with a $196-million plan to keep nearly 700,000 children from being yanked off a government health insurance program for the working poor.

The state Senate passed a measure to create a new tax on insurance companies and bring in federal money to rescue the decade-old Healthy Families program, which had been cut deeply in recent months as lawmakers scrambled to balance the state budget.

Assembly officials expressed confidence that they would garner the needed two-thirds vote in the lower house, where the bill is expected to be taken up today. Administration officials said Gov. Arnold Schwarzenegger would sign the measure.

Again, not quite right.  The “new tax” on insurance companies is an extension of an existing tax at a lower rate than before.  This is why the insurance companies support the bill; they’re getting taxed at a lower rate, keeping 600,000 kids on their insurance rolls, getting the families to pay more, and being credited with saving the program.  It’s a neat trick.  Not only that:

The new tax would replace an existing 5.5% levy set to expire in October, prompting some lawmakers to quip that the new levy is actually a tax reduction. It would expire at the end of next year, and the insurers would be reimbursed for most of their cost.

“Of course the insurance companies want this — it won’t cost them a penny,” Aanestad said.

Keeping the premiums tax in place does net $97 million in federal matching funds, which certainly helps matters.  And keeping the program alive helps children in tangible ways.  But this is a very strange conception of “shared responsibility,” when the families participating in the program will have to pay more for premiums and co-pays, with less coverage overall, and the insurance companies get a lowered tax, which they will get reimbursement for down the road.

And the craziest part of all of this is that Sam Aanestad of the Yacht Party, while admitting this is a lowered tax and that insurers will not pay anything in the final analysis, voted against the bill because it “raises taxes on California business.”

“Who pays is the bottom line here,” said state Sen. Sam Aanestad (R-Grass Valley), who voted against the bill.

Sam Aanestad in this paragraph should read Sam Aanestad from the other paragraph.

…the Assembly passed this today without a no vote.  The Governor will sign.  Insurers will get their tax cut.  Huzzah.

Given the major hits that the Healthy Families program took in the last budget revision, it’s sort of good news that the program is trying to find ways to keep almost half a million kids from being dropped from the insurance rolls.  How did they manage to do that?

California legislators have apparently reached a bipartisan solution to prevent more than half a million children from being cut from the Healthy Families public health insurance program.

The Senate Appropriations Committee voted Thursday to send the proposal to the full Senate. All but two Republicans on the committee – one was absent – voted with Democrats to move it to the floor. Gov. Arnold Schwarzenegger also supports the measure, said spokeswoman Rachel Cameron.

The state board that manages the programs had planned to begin sending disenrollment notices next week to the first wave of children set to lose coverage but decided Thursday to delay the move for a month.

The bill, which surfaced this week, would raise money for Healthy Families by having participating families share more of the costs of coverage and extending a gross premiums tax on companies that manage Medi-Cal insurance plans.

What’s this now?  A tax?  On corporations?  Well, the tax already exists.  It was due to end October 1, but this measure would extend the tax, and also LOWER it, from 5% down to 2%.  The California Association of Health Plans (the state insurance lobby) supports the bill, and if my business’ taxation were going down while I got credit for saving children’s health care (a far higher sum of money to keep Healthy Families alive comes from the First Five Commission, not this lowered tax).  Also, dental insurers got an exemption from this tax because Dave Cox wanted it.  So anyone who thinks this vote, requiring 2/3 in both houses, will be smooth sailing, industry opposition or not, is dreaming.

As stated in the article, the bill would increase premiums and co-pays for participating families, who opt into the Healthy Families program because they cannot currently afford coverage.  The Managed Risk Medical Insurance Board (MRMIB) set out cost-saving measures that would force higher costs on low-income Californians.

MRMIB also adopted four emergency regulations to trim program spending, three of which increase families’ out-of-pocket costs for Healthy Families services. Beginning November 1, families will pay higher copays for non-preventive health, dental, and vision services; prescription drugs; and emergency room visits that do not result in hospitalization. For example, families will pay $15 for using the emergency room, up from the current $5. A fourth emergency regulation requires families to enroll in the lowest-cost dental plans for their first two years on the program, at which point families could shift to a higher-cost plan. These four changes will generate net savings of $12 million in 2009-10, according to MRMIB estimates. MRMIB did not take action on a staff proposal to increase families’ premiums for savings of $5.5 million in 2009-10, because the increases are included in a bill currently moving through the Legislature (AB 1422, Bass).

I’m pleased action is being taken so that low-income kids in this state can have health insurance coverage; in the long run, we save money by allowing them consistent and preventive care instead of paying for it collectively through ER visits.  But poor families may not be able to use the coverage they get through Healthy Families if the premiums go too high.  And really, we’re talking about $100 million dollars to cover kids when the state shoveled $1.5 billion annually to the largest corporations in America, none of whom are thinking of abandoning 38 million potential customers in the nation’s largest state.  It comes down to priorities.

P.S. The Legislature took action on some other health-related bills this week.  Some decent bills may get to the Governor’s desk, but others were killed.  Cynthia Craft of Health Access has a roundup.

One of the many super smart cuts that was made under both the budget deal was the slash and burn approach to Healthy Families, the children’s health insurance program that is heavily subsidized. Add in some bonus cuts from the line item vetoes, and you have a recipe for well, this:

A state board voted Thursday to begin terminating health insurance for more than 60,000 children Oct. 1 as a result of the budget amendments signed into law recently by Gov. Arnold Schwarzenegger.

*  *  *

If additional funds are not found, board officials said, the program could ultimately drop 669,296 children in the current fiscal year, which ends June 30, 2010. Currently, 921,000 people age 18 and younger are enrolled in Healthy Families. (LA Times 8/14/09)

There is the possibility of First 5 tossing in a few bucks, but that, by law, must be limited to children 5 and under.  That doesn’t address the far more broad aims of the program of ensuring that all children can be allowed to be children.  Living your teenage years while trying to avoid getting sick or injured isn’t a way to grow up.  Ever try playing high school football while trying to avoid getting hurt? Or being involved in physical outdoor activities?

Beyond the fact that we are tossing aside a slew of federal dollars that we can’t pull down, this creates some really crazy long term cost implications. These kids will either use costly emergency rooms where the bills will eventually end up at the state house doors.  Or they will simply avoid doctors, a rather imprudent idea for teenagers. We end up with an American populace that is less healthy, less able to learn the skills that we need them to compete in the 21st Century, and less able to help turn around the economy.

While the federal government is trying to expand SCHIP, California is going the opposite direction.  There have been some seemingly serious rumors of putting Healthy Families on the ballot, although nothing has reached the ballot language step. There would almost certainly have to be some sort of funding source, probably tobacco taxes. So, yet one more silo tacked on the books.  No matter how important the goals, and I would almost certainly support this initiative, we are also creating additional process hurdles to real reform of the dysfunctional system in Sacramento.

One of the better tangible policy changes during the first 6 months of the Obama Administration is the expansion of SCHIP, the State Children’s Health Insurance Program.  Starting from the premise that all children deserve access to health insurance, SCHIP is a state/federal partnership that seeks to cover children who fall between the gaps, whose families make too much money to qualify for Medicaid, but not enough money to afford health insurance.  The program has been wildly successful since its introduction under the Clinton Administration, and virtually every state has expanded their state-based SCHIP budgets to cover the maximum amounts of children.

Every state except California, that is.  As part of the budget revision, the Legislature cut Healthy Families, causing between a $128 and $144 million shortfall in the program’s current budget.  With his veto pen, the Governor (illegally?) slashed $50 million more.  The total, as much as a $194 million shortfall, is over 50% of its budget.  This has led to the only waitlisting in the country for an SCHIP program.

The program already froze enrollment earlier this month, quickly amassing a waiting list of some 22,000 kids in need of health care, and swapped its application payment assistance program for $4.6 million in savings. Now, to cope with the cuts, it’s expecting to disenroll hundreds of thousands of participants starting later this fall […]

No talk of preserving a safety net for the neediest here. Disenrollment will be based on when participants entered the program. Children who hit their one-year coverage anniversary will not be eligible to renew their enrollment, and will instead be moved to that growing waiting list.

“At this point, it is strictly based on eligibility renewal dates,” Puddefoot said. “Those children who were enrolled in July or August, and those children who were first enrolled in September will be the first to be disenrolled.

This could impact as many as 900,000 children.

Officials with the Managed Risk Medical Insurance Board met in Sacramento today to figure out the policy for waitlisting or disenrollment, and to explore additional avenues of support to fill the program gap.  Many have speculated that First Five, the successful voter-approved program to support young children, could provide some funding, but they cannot cover a $194 million dollar hole, and their mandate allows them only to support children between 0-5.  At the meeting, the board basically punted.

The task of shedding hundreds of thousands of children from the public Healthy Families health insurance program – or finding ways to keep some enrolled – was put off Thursday until Aug. 13 by the board managing the program.

The Managed Risk Medical Insurance Board must come up with a plan to respond to deep cuts in California’s budget, including Healthy Families […]

Disenrolling children from Healthy Families “is something we do not relish doing,” said Cliff Allenby, the board’s chairman, as members listened to a number of speakers anticipating harm that will come from cutting so many children from insurance. Allenby said the board “may have no choice,” but is looking at ways to restructure the program to reduce costs and raise money for premiums from other sources.

Among the options under consideration: eliminating vision benefits, increasing co-pays and changing reimbursement schedules.

First Five committed to help with some money, but failed to delineate the amount.

I know one way to instantly restore $50 million in funding for poor children – by overriding Arnold’s possibly illegal vetoes.

Robert Cruickshank pretty well covers the disaster that will be the upcoming budget “deal” between legislative Democrats and Arnold Schwarzenegger.  By the way, this is BEFORE the Yacht Party tries to enact a few more goodies for the privilege of letting Democrats vote for $26 billion in cuts, gimmicks and raids on local government.  We’ll see a big sigh of relief from lawmakers over the next few days that will be wholly unwarranted.

Particularly galling is the targeting of city and county budgets to cover the state gap.  By siphoning off almost $1 billion in gas tax funds slated for cities and counties, not one pothole in California will get filled this year.  With the loss of $1.7 billion in redevlopment funds, not one project like affordable housing will get initiated.  And by taking $1.3 billion in local property taxes, lots of city and county employees, particularly in public safety, will end up out of work.  It’s really robbery on a pretty grand scale, and it will offset any economic recovery through stimulus funding throughout the state.

One of the major consequences of this cuts-only budget will be, paradoxically, higher costs for individuals and the state.  When you eliminate or severely restrict social services programs, those individuals who rely on them will have to go elsewhere for those services.  The alternatives are more expensive for everyone.

Irene Steinlage has trouble walking, getting dressed, making her bed, taking a bath. She has stayed in her Folsom home with the help of a health aide, one that Gov. Arnold Schwarzenegger says the state can no longer afford.

The governor’s plan to take away such care is meant to save money. But it could end up costing California more by forcing the 85-year-old, who has Parkinson’s, osteoporosis and other ailments — and thousands like her — into nursing homes.

“I couldn’t possibly afford a nursing home,” Steinlage said. So the state could be saddled with a Medi-Cal tab that is triple the cost of her home care worker, who receives $10.40 an hour five days a week […]

Others say the experience of governments that have closed gaping deficits with deep program cuts suggests that the price of doing so is hefty.

“It’s pay now or pay later,” said Nicholas Freudenberg, who co-wrote a study of the long-term effects of service reductions made in the aftermath of New York City’s fiscal crisis of 1975.

His 2006 study, published in the American Journal of Public Health, found that less than $10 billion in cuts to healthcare, education and law enforcement in New York City over four years led to at least $54 billion in additional costs over a 20-year period, using 2004 dollars and adjusted for inflation. Consequences included higher rates of HIV, a worsened tuberculosis epidemic and a spike in homicides.

“Those potential epidemics that are being seeded by Gov. Schwarzenegger’s cuts will not come in his term or the terms of people who are making these decisions,” Freudenberg said. “It will be several years down the line.”

The sick thing is that the Governor, and maybe even some in the Yacht Party, know this.  The consequences of program cuts are easily seen.  Eliminating the Poison Control System, for example, means that people calling the emergency number (many of whom don’t need to see a doctor based on poison accidentally swallowed) will instead go to the ER, and many of those visits will be from people on Medi-Cal, leading to higher costs.  Cutting adult day care will send many into nursing homes, at a higher cost to the state.  Losing Cal Works welfare funding will send children into foster care, at a higher cost.  Cutting the meager drug treatment and vocational training in prisons almost assures an even higher recidivism rate, at a higher cost.

This is not a difficult calculation to make.  We fund social services programs not only because we have an obligation in a developed society not to see people dying on the street, but because we can create programs that get people back to self-sufficiency at a lower overall cost.  There is only one reason not to fund such programs – because an arrogant and entitled right wing refuses to fund these government obligations in the short term, preferring apparently to pay more in the long term.  There has been enough money in the last few budgets to produce massive corporate tax cuts, but not enough to get someone with a chemical dependency the treatment he or she needs.  There’s been enough money to protect California’s unique status as the only oil-producing state not to charge corporations for taking our natural resources out of the ground, but not enough to provide long-term care services that relieve the burden of nursing home funding over the long term.  There’s enough money to keep in place useless enterprise zones that create nothing but tax giveaways, but not enough to keep the state from becoming the first in the nation to put poor kids on a waiting list for affordable health insurance.

We hear about the “generous social services programs” in California that simply had to be cut, but they’ve been reduced to the point where they are almost unanimously the worst in the nation.  That depresses the business climate, that moves bodies out of the state, that alienates the public.  And Arnold Schwarzenegger knows this, and he did it anyway, to keep a promise to what little of his base he has left.

Ultimately, this system isn’t designed to produce good budgets.  Without a media that cares, no amount of activism or public pressure can be brought to bear on a shameless and unaccountable minority.  If you need proof of the need for a complete rethinking of how to structure government in California in the 21st century, look at the last seven months.

On May 19, voters were asked to divert money from First Five programs to pay for General Fund expenditures.  The argument was that First Five had a reserve that was just “sitting around” and they should give up some of that money, earmarked for children’s programs, to pay for the budget.  At Calitics, we called this the “if it ain’t broke, break it” proposition.  First Five, financed by a tax on cigarette sales, was well-funded and able to make multi-year program projections, so that the programs started up were not in perpetual fear of being dropped.

One of the values of First Five is that they can seek out other programs affecting children and contribute to them, in keeping with their mandate.  And that is what they have voluntarily agreed to do with respect to the Healthy Families program, California’s version of S-CHIP.

Meeting in Sacramento this afternoon, the First 5 California Children and Families Commission agreed to help the Healthy Families Program, which faces a $90 million General Fund shortfall in 2009-10. But the Commission declined to commit to a specific level of financial assistance. As a result, it appears all but certain that the enrollment freeze approved last month by the Managed Risk Medical Insurance Board, which oversees Healthy Families, will take effect on Friday, July 17.

In a resolution, the First 5 Commission committed “to join with like-minded public and private partners, including but not limited to health plans and philanthropic organizations, to provide financial assistance in Fiscal Year 2009-10 to the extent practicable and feasible…to ensure young children have access to affordable health insurance coverage.” This commitment, however, “is contingent upon the availability of funds in the applicable First 5 California accounts.”

I wish that First Five would have chosen a specific funding level, which could have rolled back the enrollment freeze.  Still, they are making a commitment to help provide health insurance to needy children, one they couldn’t have made if the state clawed back some of their money in the May 19 election.  This way, First Five can target the money and keep in line with what the voters asked from them – to use their revenue to provide needed services for children.  The state could have used that money for anything if they skimmed it off the top.

People often wail about ballot-box budgeting and the broken initiative process in the state, and to an extent I agree with them.  But First Five is an example of GOOD ballot-box budgeting.  It has a dedicated funding source, it’s well-managed and well-capitalized, and it has the ability to make contingencies.  If the structure of state government fails to allow increased revenue to pay for needed services, it’s perfectly logical to go outside that process and produce dedicated sources of funding.  It shows the virtue of a balanced approach.  I don’t necessarily want the ballot to do all of Sacramento’s work for it, but the broken system of government sometimes leaves no choice.

Looks like Darrell Steinberg is hedging his bets on fixing the broken political structure in Sacramento by going to the ballot to protect children’s health coverage:

Days after Gov. Arnold Schwarzenegger proposed to abolish the Healthy Families Program (which would entail booting more than 900,000 California kids out of health insurance), Steinberg’s Committee for a New Economy on Monday made a $75,000 contribution to Californians for Children’s Health – a sizable cash infusion for a committee that previously had only about $20,000 in its coffers.

The statement of organization for Californians for Children’s Health says the group – for which a Web site is under construction – exists to support “expansion of children’s health coverage,” and its sponsoring organizations include the Children’s Defense Fund Action Council; the Children’s Partnership, a project of the Tides Center; Children Now; and PICO California. Its CFO is PICO California director Jim Keddy; its secretary is Kelly Hardy, Children Now’s associate director for health.

Hardy earlier today told me Californians for Children’s Health aims to develop a ballot measure for November 2010, and although today’s rapidly changing budget environment makes it hard to say exactly what that measure’s specifics will be, “we’re contemplating new revenue sources that would come in, not General Fund sources, that would support children’s coverage programs.”

Steinberg has a history of going outside General Fund revenues to pay for social services projects – see the millionaire’s tax in Prop. 63, which funds mental health programs.

You need to play within the hand dealt, and voters have shown a willingness to use tax increases to fund specific programs.  Losing the Healthy Families Program would mean 900,000 kids without health care in California, and we would be the only state in the country not accessing federal SCHIP funds.  So obviously, you try to get that revenue absolutely any way you can.

At the same time, is this any way to run a government?  Create a system where no revenues can be raised inside the legislature, forcing stakeholders and politicians to go to voters to look for a dedicated stream here and another dedicated stream there?  This is unsustainable to the nth degree.  We will not transform California one dedicated funding stream at a time.  It just won’t work, and we’ll spend hundreds of millions of dollars on consultants in the process.  Steinberg shouldn’t foreclose the option, of course, but his money would be better spent on reform efforts so that he no longer needs to go to the voters for everything, and we can have a representative democracy such that has worked in America for over 220 years.

Moreover, I fear that Steinberg is setting this fallback plan up assuming that Healthy Families will be either eliminated or gutted in the next couple weeks.  Perhaps the donation to a potential ballot committee is a threat to the Governor; but perhaps it’s a signal that the cuts can come down.  Let’s be clear – in the meantime, while we wait for the results of that election, children will die from a lack of health care coverage.  We have other options – Jean Ross describes some of them beautifully here – and the Democratic legislature should be drawing lines in the sand, not giving up on drastic cuts and making contingencies.

I just appeared on KPFA with Eric Klein to talk about the Governor’s proposed budget cuts, along with several experts and stakeholders, including friend of Calitics Anthony Wright of Health Access California.  I agree with him that it’s almost hard to fathom the amount and severity of the cuts proposed for health care, especially at a time with the federal government is moving forward with a “do or die” plan to reform the health care market, increase access and lower costs.  The proposed Governor Hoover cuts would have the exact opposite effect, and the people gravely impacted by this will not have the luxury of waiting around for the Feds to catch up and fill in the gaps.

Two recent CBP fact sheets help break down the Governor’s proposed cuts to Medi-Cal and Healthy Families, in numbers that are easier to grasp. These fact sheets show:

More than 940,000 California children would lose health coverage if the Healthy Families Program is eliminated as the Governor proposes. More than 240,000 children in Los Angeles county alone would be affected. Want to know how many children would be impacted in your county? Check out the fact sheet to see.

In total, more than 1.9 million Californians could lose access to health coverage within three years through proposed reductions to the Medi-Cal Program and elimination of Healthy Families.

As the Governor said himself today, “behind every one of those dollars that we cut there are real faces.”

Kudos to the LA Times, by the way, for allowing the great unmentionable to get printed on their pages – the decisions made in Sacramento will truly be the difference between life and death for many Californians.

Schwarzenegger argues that the state’s declining economy and plummeting tax revenues have boxed California into a corner, forcing deep and historic cuts in the health and welfare programs that form the state’s social safety net. Without those tough measures, he says, California will cartwheel toward insolvency.

But a 10-person legislative budget panel, which is reviewing the governor’s proposals, listened during a long day in a crowded hearing room to scores of people who said their survival depends on programs set to be hit by the budget ax.

They heard from mothers of children with autism, representatives of people on dialysis, poor parents whose children see dentists on the government’s dime, former drug abusers set straight by a state rehab program.

And they heard from a woman named Lynnea Garbutt who has lived with AIDS all of her 24 years.

She has survived with the help of a state program that provides the expensive antiviral drugs she takes. Now, with that program facing elimination, she pleaded with lawmakers to save it — and her life.

“If these cuts take place, you’re not just cutting money from the program — you’re cutting my life,” she told the panel, her voice shaking and tears falling. “I choose to live. Please don’t make me die. My choice is life.”

This is how Yacht Partier Chuck DeVore responded – move out of the state.  Love it or leave it!

The cuts made to programs like Healthy Families (California’s SCHIP) would eliminate federal matching funds and double or triple the scope of the cuts.  And it would be one thing, by the way, if the Yacht Party simply held the line and said “we can’t afford it.”  But no, they want to spend billions of dollars, only on their own projects instead of saving human lives.

In this article in the San Diego Union Tribune, the same Republicans (and Republican governor) who would eliminate children’s health care and basic services for the neediest Californians, actually want the state to pony up the money for a water bond.

Schwarzenegger, says the article, is still fixated on a whopping $10 billion bond. And Senate Republicans are right there with him:

“Sen. Dave Cogdill of Modesto, the lead Republican on water issues, agreed. “It’s obviously a tough time to bring it forward, but we can’t wait,” the article notes.

We can’t wait? According to my calculator, If the entire $10 billion was sold together, the interest payment could be in the neighborhood of $660 million annually. That’s $660 million more that would have to come out of  schools, health care, and other items on the chopping block.

Similarly, the Yacht Party cried poor about programs that help people, but made room in the February budget for a huge corporate tax cut.

Everyone who has spent 10 seconds on this recognizes that there’s no good way to use current revenues to provide the basic level of services Californians deserve.  To the extent that I have hope that we will overcome the selfishness of the cruel and the impossibility of navigating a broken system, it comes from people, who are fed up and starving for leadership and change from a government that no longer serves their interests.  To turn the figurative starvation literal, Los Angeles teachers are going on a hunger strike to protest budget cuts.  We’re all hungry, and we’ll be a lot hungrier if Governor Hoover has his way.

Something for the legislature to read while they’re on LOCKDOWN.

• We’re in a special session of the legislature, separate from their normal work.  So while the Yacht Party stonewalls and both sides bicker, they are making $173 a day for the privilege, with the current total at $128,000 and counting.  Good work if you can get it.

• Stockton, Merced and Modesto were dead last nationally in home prices, with homes in all three metro areas losing at least 30% of their value in the first nine months of the year.  The Central Valley is just getting buried.  If you want to know where the rest of the state (and the nation) is headed, look there.

• The state’s Healthy Families program, California’s contribution to S-CHIP, was on the verge of becoming extinct until First 5 provided a $16 million dollar cash infusion, allowing their enrollment to remain open through the end of the fiscal year in June.  This is of course one of the programs on the Yacht Party’s chopping block.  Because who likes healthy kids?

• Peter Schrag tore the Yacht Party a new one today, and it was most satisfying.

Today’s GOP is a very different party, a hard-line group of self-insulated ideologues, more like a political cult than like an inclusive party that stretches its core principles to be inviting to people at or beyond that core.

Couldn’t have said it better myself.

• SD-26: Mark Ridley-Thomas, now an LA County Supervisor, has endorsed Assemblymember Curren Price to fill his seat in the upcoming special election, the primary of which is scheduled for March 24.  Price is expected to be challenged by Assemblymember Mike Davis.  Either of them winning would trigger ANOTHER special election for their vacant Assembly seat.  And on and on.

• CA-31: Ben Smith is reporting that Xavier Becerra will turn down the position of US Trade Representative.  When there was a two-week lull after the rumor leaked with no announcement, I figured as much.  All the more reason for Hilda Solis to run for Governor, as the Vice-Chair of the House Dem caucus won’t be opening up.