Brown’s proposal on child health meets strong opposition

May 8, 2012

By Daniel Weintraub
California Health Report

Gov. Jerry Brown’s proposal to shift nearly 1 million children from subsidized private insurance into the state Medi-Cal program is running into a wall of opposition from children’s advocates, health care providers and faith-based groups.

Brown included the proposal to eliminate the state’s Healthy Families program in his January budget and is expected to stick with it when he releases his revised budget next week.

But the coalition of 40 groups opposing his plan is backing an alternative that seems likely to win more support among the Democrats who control the Legislature and will be writing the final version of next year’s spending plan. The coalition includes Children Now, the Children’s Defense Fund, the California Medical Association, PICO and many other groups.

The option backed by the coalition would preserve Healthy Families but move about 200,000 children between the ages of 6 and 18 into Medi-Cal next year.

Those children – from families with incomes below 133 percent of the federal poverty level – are already scheduled to be moved to Medi-Cal in 2014 as part of the implementation of the federal Affordable Care Act, if the health reform law passed two years ago survives a challenge pending in the US Supreme Court.

“We’re concerned that the governor’s proposal is being driven by questionable estimates of budget savings, rather than ensuring that these children get the best health services possible,” said Kelly Hardy, who monitors health policy issues for Children Now, a non-profit group.

“Without sufficient preparation, we think this could undermine the successful Healthy Families program as well as the health and welfare of the kids currently enrolled in Medi-Cal.”

Both Medi-Cal and Healthy Families are joint state and federal programs offered to low-income families, but they serve different populations in different ways.

Medi-Cal, which serves adults and children from families at or below the poverty level, serves some children through managed care plans and others with fee-for-service reimbursements to individual doctors and hospitals that agree to care for the poor. Families are not required to pay any premiums for their coverage. Generally, the federal government matches each dollar the state spends on the program.

Healthy Families is aimed at children up to 19 years old in families that don’t qualify for Medi-Cal and have incomes up to 250 percent of the poverty level, or about $46,000 for a family of three. Families are given private insurance and pay premiums on a sliding scale, according to their income. The federal government provides $2 for each dollar the state spends.

Because Medi-Cal rates are lower than what the state pays in the Healthy Families program, Brown is hoping to save about $64 million next year by cutting rates paid to the managed care plans under Healthy Families in October and then shifting all of the children into Medi-Cal by the middle of 2013.

But the non-partisan Legislative Analyst’s Office has suggested that Brown’s hoped-for savings might be overly optimistic. The office also questions whether the move can be accomplished without disrupting care for the children involved.

One problem with the governor’s proposal is that the managed care plans serving Healthy Families children now might not agree to a 25 percent reduction in their fees. That would leave those children without coverage until they could be transitioned into Medi-Cal.

But even once the affected kids are shifted to Medi-Cal, there might not be enough doctors to serve them. In many counties without managed care where Medi-Cal clients see individual doctors on a fee-for-service basis, there is already a shortage of participating doctors, which makes it difficult for people to get an appointment. Adding still more potential patients to that program could overwhelm it.

Hardy said it would make more sense to start slowly, moving only those children who are already scheduled to be shifted a year later as part of the Affordable Care Act.

“Then we need to do some rigorous evaluation about Medi-Cal’s capacity to handle an influx of new kids, and sign up adequate networks of providers to handle those kids,” she said. “We’ve been able to get a lot of weight behind the view that we should wait on the majority of the children.”

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