Plan to Insure Children Becomes Law

Just six weeks after he proposed a major new health initiative for children, Gov. Pete Wilson signed the slightly modified plan into law Thursday, creating the largest new medical program in California since Congress passed Medicaid in 1965.

The $500-million Healthy Families program--two-thirds of which is federally funded--will offer subsidized health insurance to more than 580,000 California children whose families earn too much money to qualify for Medi-Cal but not enough to afford their own plans or to be covered by an employer.

Lawmakers from both parties who spoke during a bill-signing ceremony at Childrens Hospital of Los Angeles gave poignant testimony about the strong motivation they felt after hearing stories of children who have suffered severe ailments--and sometimes death--because of maladies that might have been easily treated for insured patients.

In one example, the death of a 5-year-old boy named Joseph, whose leukemia was not immediately treated because he lacked insurance, was described by Assembly Majority Leader Antonio Villaraigosa (D-Los Angeles).

“This [bill] is for all of the Josephs in California,” the assemblyman said. “Those children whose deaths might have been prevented if only they had health insurance when they needed it.”

The problem of uninsured children has been growing nationwide in recent years, partly because businesses have scaled back the benefits they offer employees. California has a disproportionate share of the problem, officials say, because it has a large number of entry-level jobs in the service industry.

Today, about 1.6 million California children under age 18 are not insured--nearly 15% of the nation’s total. With the state’s new program, however, officials say all of those children should be able to enroll in a health plan.

Those from families below the federal poverty level--$16,050 for a family of four--are already eligible for Medi-Cal. Officials say those from families earning more than 200% of the federal poverty level--or about $32,100 annually for a family of four--can afford to buy their own insurance or they are covered by an employer.

The Healthy Families program will cover the estimated 580,000 children whose household income is between 100% and 200% of the poverty threshold.

That still leaves the state with the challenge of reaching nearly 1 million children who are apparently not taking advantage of health coverage that is available to them. About half of those are eligible for Medi-Cal but have not applied, officials say. The remainder are from families earning more than 200% of the poverty level.

One of the three bills Wilson signed Thursday is aimed at boosting the Medi-Cal enrollment by significantly streamlining the application process and launching an outreach effort.

“We know that California’s future is dependent upon our ability to best prepare our children for the challenges presented by this shrinking, ever-competitive age in which we live,” Wilson said. “But first, we must assure that our kids are healthy enough not only to make it to school, but to be the kind of attentive, motivated learners who will excel in the classroom.”

Under the governor’s design--and over the objection of many Democrats--the Healthy Families program will offer subsidized insurance through private carriers who are organized into regional pools created by the state.

Democrats and many child advocates had favored a plan that would have simply raised the income threshold for Medi-Cal eligibility from 100% to 200% of the poverty level.

Wilson contended, however, that Medi-Cal is already an over-bureaucratic government mess as demonstrated by its inability to reach all of the children eligible for its services.

“Obviously we had to compromise in the end,” said Villaraigosa. “I believed we had to seize the historic moment and not quibble about the best way to do that.”

Villaraigosa’s bill requires that the insurance plans offered under the Healthy Families program be comparable to the benefits available to state employees. The governor said applicants would have an option to choose from various plans, some of which will require higher premiums.

All families enrolled in the program will pay a monthly premium of between $7 and $27 per child depending on their income and the plan they choose. In addition, most outpatient visits--except for preventive care--will require a $5 payment.

The program is expected to begin next summer, perhaps as early as June. Part of the delay is because lawmakers did not set aside state funds for the program in the budget they passed in August. The $500-million program will require about $175 million from the state.

The federal Childrens Health Initiative that President Clinton signed into law in August offered to pay California up to $855 million this year. But state lawmakers decided that they could accomplish their goal substantially cheaper. They will apply for just $325 million in federal funds.

The unused federal money remained the most controversial element of the new legislation Thursday.

“This has to be characterized as a historic moment, but the legislation as it stands does not fully maximize the federal dollars available to us,” said Toni Yaffe, a director at the Los Angeles County Department of Health Services.

Wilson said he hopes to develop plans next year that might utilize the additional federal funds. He declined to discuss the alternatives.

Villaraigosa said, however, that he and the Legislature’s Democratic leaders will push for a universal health care program in California that will reach the 5.5 million working poor adults who remain uninsured. To use the federal money for that expansion would require a waiver from the U.S. Department of Health and Human Services.

“We are clear that this is just a first step,” he said. “There is no question we have the dollars to expand the program we created here.”