Children Face Catch-22 on Vaccinations

Youngsters covered under the state’s $500-million Healthy Families Program will not be eligible for the federal government’s free vaccinations--potentially adding millions of dollars to the cost of California’s basic health insurance plan for children of the working poor.

In a Catch-22 scenario, federal officials notified the state this week that about 580,000 youngsters in Healthy Families, expected to start up in July, are not eligible for free vaccination under the law because they are neither on Medi-Cal nor uninsured. Healthy Families is being instituted to purchase medical care for children from poor families without insurance.

Though no one expects vaccination--a cornerstone of any children’s health program--to be dropped from Healthy Families, the decision by the U.S. Health Care Financing Administration means that the state may have to come up with millions more dollars to purchase vaccines.

That has outraged state officials as well as medical and health organizations throughout California.

“It’s not fair to the state, and it’s a disincentive” for states to start up their own expanded insurance programs for the working poor, said Sandra Shewry, executive director of the Managed Risk Medical Insurance board, which is overseeing Healthy Families.

She said the federal decision, though it won’t deprive children of shots, is bad public policy and wasteful. Ironically, she said, though the state will have to shell out untold millions to pay for vaccines, the federal government is penalizing itself even more. That is because it is obligated by law to cover 65% of whatever the state buys, she said.

The dispute is arising because California, like eight other states, decided not to simply expand its Medicaid coverage, but to create a separate private insurance program for children from low-income families that do not qualify for Medicaid, which is called Medi-Cal in California. The federal government then belatedly realized that the new program made kids ineligible for the free federal Vaccine for Children Program, Shewry said.

A U.S. Health Care Financing Administration official said Wednesday that the agency is open to working with the state to resolve the issue.

Shewry said there are basically only two options, both of which are costly. One is to require that the health plans contracting with Healthy Families purchase vaccines at commercial rates. The other is to attempt to purchase vaccines at a discounted rate from the federal government, which would be less costly but still onerous, Shewry said.

The California Medical Assn., fearful that doctors will be stuck subsidizing vaccinations, urged a reconsideration of the federal decision. “The success of our program is in jeopardy,” the association said in a statement.

Not including any costs added by vaccine purchases, Healthy Families will be funded by $320 million a year from the federal government and $166 million annually from the state.