By Wendy Lazarus, Founder, The Children’s Partnership

As we head into that time of year when our young people are graduating from high-school

and college, many commencement speeches will acknowledge the sacrifices many parents make to ensure their children succeed. Imagine how much more difficult that becomes when a child requires medical care and his or her parents are unable to access a doctor or health care coverage. As legislative leaders and the Governor wrestle over budget decisions to decide the fate of children who rely on Healthy Families, our state’s moms and dads deserve someone to stand up for them.

In a recent Capitol Weekly piece, I described the details of how health care for nearly a million California kids hangs in the balance as the Legislature completes its budget deliberations, which includes the Governor’s proposal to close the doors of the Healthy Families Program. The Legislature has an opportunity to pass what the Assembly and Senate Budget Subcommittees did: keep all kids, except those required by the ACA to move to the Medi-Cal program, in the Healthy Families Program. By any measure, Healthy Families is highly successful. California children who are newly enrolled in Healthy Families have been shown to have a nearly 63% improvement in performance and paying attention in class. Studies also show Healthy Families has substantially improved kids’ access to needed health care and produced meaningful improvements in their physical, mental, and social well-being.

The Governor plans to transfer nearly one million children in Healthy Families into California’s already overstretched Medi-Cal program over a brief nine-month period, starting in October 2012. Not only does it leave the Medi-Cal program inadequate time to prepare to receive so many new kids and get them set up properly in a new health care program, but families are already facing difficulties finding a doctor or dentist who will take their kids under Medi-Cal. So Medi-Cal needs more time to shore up the network of doctors for the children it already serves before stretching its capacity to add almost 900,000 more children. This is not the time to move nearly a million children from Healthy Families.

Instead of this overreach that could undermine the progress made in promoting healthy kids, a common sense, alternative approach is recommended by over 40 organizations. We recommend a more gradual shift, moving 200,000 Healthy Families kids into Medi-Cal-those kids who, based on the new federal health reform law, will be enrolled in Medi-Cal with their families by January 2014.

Last week, Governor Brown released a May revision to his budget proposal that ignored recommendations for an incremental approach. These huge disruptions to health care programs for nearly a million children do not even produce significant budget savings, so why put these children at risk? Any parent sending their graduates off to their future knows that being a parent is a tough job, 365 days a year. Today’s parents should not face a lack of access to health care for their children. The Governor and Legislators should protect the children covered in Healthy Families AND help parents and the families that rely on them to have healthier–and more secure– lives.

Wendy Lazarus, Founder & Co-President of The Children’s Partnership, has been an advocate for children, nationally and in California, for more than three decades.

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.