Advocates angered by Healthy Families elimination

June 21, 2012

By Daniel Weintraub
California Health Report

Advocates for California children were outraged Thursday when Democrats in the Legislature disclosed that they had accepted Gov. Jerry Brown’s proposal to eliminate the Healthy Families insurance program next year.

Brown included the proposal in his January budget, but until Thursday Democrats had resisted it. The agreement between legislative leaders and the governor calls for the program to be phased out during 2013.

Most of the nearly 900,000 children in the program will eventually be served by Medi-Cal, the state’s larger and better known subsidized health insurance program.

But advocates say Healthy Families is a better deal for low-income families, and many children might fall through the cracks as the state makes the transition.

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

Medi-Cal serves adults and children from families at or below the poverty level. Some of those children get their care through managed care plans and others see doctors or go to hospitals that are reimbursed from a fee schedule set by the state. Families are not required to pay any premiums for their coverage.

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.

For Medi-Cal, the federal government matches California’s spending with roughly a dollar for every dollar the state spends. For Healthy Families, 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 was 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 one potential 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 Brown is counting on. 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.

“The Governor and legislative leaders have struck a short-sighted deal that
unnecessarily puts the health of California children at risk,” Wendy Lazarus,
Founder and Co-President of The Children’s Partnership, said in a statement. “While we understand that
hard budget choices had to be made, those choices should not fall on the backs of our
children and their ability to get the care they need to stay healthy and succeed in life.”

Peter Manzo, Presidenta nd CEO of United Ways of California, said the governor and lawmakers were “experimenting” with the health of nearly 900,000 children.

“Shifting all of those
children out of a popular, successful program, with no guarantee that guarantee that they’ll actually
have access to providers, is an unprecedented and reckless move.”

A coalition of children’s advocates had proposed an alternative that would have shifted from Healthy Families only those children who are already due to be placed into Medi-Cal in January 2014 as part of the federal health reform.

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