The federal Department of Health and Human Services on Tuesday gave California the green light for a plan to extend health insurance coverage to as many as 500,000 children of working poor in the next three years.
The plan could bring as much as $855 million in federal funds to the state in the current fiscal year, which ends Sept. 30. During that period, 100,000 uninsured children are expected to be covered by the plan.
California is by far the largest recipient of funds from the new Children's Health Insurance Plan, which was proposed by the Clinton administration and approved by Congress in August.
The state is the sixth in the nation to get approval for its coverage plan from the federal government, which is committed to spend $24 billion over the next five years to expand health insurance to the children of families who make too much to qualify for Medicaid and other health care programs for the poor but too little to afford private coverage.
"We're keeping our promise to make work pay," Health and Human Services Secretary Donna Shalala said in announcing approval of the California plan. "Many of these families never went onto welfare. They've gotten up every day and gone to work and struggled to take care of their families. And this helps. I can't think of a better investment."
Under California's plan, the federal funds would be used to expand enrollment in three state health insurance programs. The state hopes to use the funds to enroll an additional 33,000 children in Medi-Cal, which serves families with incomes below the federal poverty level ($16,450 a year for a family of four).
Beyond that, the funds will allow families with annual incomes of more than $40,000 for a family of four to get health insurance for their children under two state programs--the Access for Infants and Mothers program for infants under 1 year old, and the Healthy Families program for children ages 1 to 19.
In a controversial decision relayed to state officials last week, the federal government has barred the use of federal funds for the immunization of children enrolled in the Healthy Families program. The decision, which has raised protests from California officials, would shift millions of dollars in immunization costs to the state.
Shalala asserted Tuesday that besides helping lower-income children and their families, the Children's Health Insurance Plan will give California's health care industry a boost. She said that the program will add a relatively healthy segment of patients to the rolls of the state's private insurers and reduce the burden of uninsured children on hospitals and health care providers.
"It's a good investment for everyone in California in terms of long-term health of Californians. What is better than having healthy children?" she said.
Shalala also called the program "a very good deal for California financially" because it requires the state to pay 50% in matching funds with federal dollars. That is a more generous formula than the one that exists for Medi-Cal, which requires the state to match federal funds dollar for dollar.
Clinton administration officials have touted the Children's Health Insurance Plan as a third pillar in its effort to reward work and discourage dependence on public assistance among Americans at the bottom of the economic ladder. In 1993, the Clinton administration persuaded legislators to increase the earned income tax credit, which boosts the income of many low-wage workers above the poverty level by reducing their tax liability. And in 1996, the administration fought reluctant Republicans to raise the minimum wage to $5.15 per hour by September 1997.
Those two initiatives alone have boosted the yearly income of a full-time, low-wage worker by $3,000, said White House domestic advisor Gene Sperling. "But all that could be wiped out by a single illness if a child doesn't have health care," Sperling said.
In all, Sperling said, the $24-billion Children's Health Insurance Plan, which was drafted last year in hard bargaining with congressional Republicans, could extend health insurance to 5 million uninsured children in the next five years. Today, more than 10 million American children--one in seven--are uninsured.