Wilson Says Error Flaws His Child Health Plan

Contending that the governor’s auto-pen was used to approve a plan he didn’t endorse, the Wilson administration is attempting to scale back a new health insurance program that will provide subsidized medical benefits to poor children.

Just weeks before his much-debated Healthy Families program was to go into effect, Gov. Pete Wilson is proposing changes that would deny coverage to tens of thousands of low-income children, according to one lawmaker’s estimate.

Wilson wants to amend a federally approved program that was written by his own Department of Health Services, ratified by a five-member state board and reviewed by the governor’s staff before his signature was placed on it.

“This was a staff mistake in the governor’s office,” said press secretary Sean Walsh. “The governor did not review the final document nor did he sign the final document.”

Wilson believes that the plan would allow too many families who have private insurance to qualify for lower cost government-subsidized insurance, said Walsh.

Designed to help the working poor, the $500-million-a-year Healthy Families program will offer subsidized health insurance to about 580,000 children whose families earn too much to qualify for Medi-Cal but not enough to afford private coverage.

Adoption of the program coincided with a national movement to improve the well-being of children. It garnered support in both political parties. At the state’s request, the federal government, which pays two-thirds of the cost, expedited approval of the program so it could go into effect by July.

Walsh said the governor decided to alter the plan after Republican legislators complained that the program should have been limited to only the poorest of children.

His request has to be approved by members of the state Managed Risk Medical Insurance Board, which meets Thursday. A majority of the five-member board is appointed by the governor. Federal officials then must ratify any changes proposed by the state.

A spokesman for the federal Health Care Financing Administration said Friday that there would be no comment until the proposal is received and reviewed.

‘Automatic’ Pen Used

When the state submitted its plan to the federal agency in November, the documents bore two Wilson signatures. But Walsh said that these were affixed by an electronic device commonly known as an automatic pen, which duplicates the governor’s handwriting. He said it is used on routine documents and letters.

“When [the matter] came to our attention we were rather flabbergasted . . . and we realized that we had a significant policy problem on our hands,” Walsh said.

The changes proposed by Wilson not only may delay the program but have also prompted angry protests from some Democrats and advocates for the poor.

“It’s very difficult for me to imagine that this was a mistake,” said Lucy Quacinella, staff attorney in Sacramento for the Western Center on Law and Poverty. “The two agencies involved have easily had over 40 staff people working on this program. This particular issue has been very high profile. . . . It’s hard to imagine how the governor could have missed it.”

The issue that ignited the controversy is the income levels at which families become eligible for the program. As originally outlined by the Wilson administration, families would qualify for coverage if their annual income is 100% to 200% of the federal poverty level after deductions for child care, work expenses and other costs. For a family of four, 200% of the poverty level is an annual income of $32,900.

The Wilson administration wants to end the deductions, contending that they would drive the qualifying income levels far beyond $32,900.

The precise number of people affected by the governor’s proposed change and the potential savings are unknown, his staff said.

But senate Insurance Committee Chairman Herschel Rosenthal (D-Los Angeles) said he believes that the change would eliminate thousands of poor children from the program and force hundreds of thousands of families to pay higher premiums for government-subsidized care.

Families whose income is between 151% and 200% of the poverty level pay higher premiums than families who have lower incomes. At the poverty level and below, families are eligible for Medi-Cal.

Rosenthal said the purpose of the deductions was to have consistent rules governing the Healthy Families program and Medi-Cal, which also considers deductions such as child care. “I am confused and alarmed as to why this last-minute change is necessary,” Rosenthal wrote Wilson, “since the use of such deductions was included in the Nov. 1997 plan . . . which you signed.”

Quacinella said Wilson’s proposal would make the system more confusing and complicated while welfare recipients are moving into the ranks of the working poor--and that it will only make it harder to get medical care for their children.

Most families who would be dropped from the program do not have access to employer-subsidized health insurance, she said.

But Wilson’s legislative secretary, Jeanne Cain, said the governor made it clear that he did not want the income ceilings to be so high that they would encourage employers to stop providing health insurance benefits to their low-wage workers.

“Our concern is, it’s an incentive to drop coverage,” she said. “And that’s the wrong message.”

She said the governor had been so adamant about that point and repeated it so often in meetings that his staff just assumed the final plan prepared by his health administrators would not include the deductions.

Health and Welfare Deputy Secretary Tom McCaffery said that, although top level administrators were aware of the governor’s concerns, the nuts and bolts of the actual plan were put together at lower levels of the bureaucracy.

Assembly Minority Leader Bill Leonard (R-San Bernardino) said most Republicans would not have voted for the plan if they had known that the final version was going to include the deductions. “We’d like to see that the program benefits the working poor who are uninsured [and] who are least able to afford buying insurance,” he said.