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 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.

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.