Group Sues U.S. Over Curbs on Free Shots

The California Medical Assn. on Tuesday sued the federal government, formally challenging its refusal to provide free vaccinations to hundreds of thousands of children eligible for the new Healthy Families insurance program for low-income residents.

The lawsuit protests a Catch-22 situation that has irked a long list of the state’s health care providers, consumer advocates and politicians. And their outcry may spread to other states.

The dispute stems from a determination by the U.S. Health Care Financing Administration that federal law prohibits dispensing free vaccines to children who have private health insurance, including those covered by the Healthy Families program. The decision jolted state officials, because the very purpose of the private Healthy Families program--heavily subsidized by the federal government--is to provide key health services to several hundred thousand children who would otherwise go uninsured.

“These children are uninsured,” said Elizabeth McNeil, the director of medical policy for the state association. “That’s why they are eligible for this program.”

Critics say the federal government’s stance is a blow to any of the 19 states that decided to create private or semiprivate insurance programs for children of the working poor. In 1997, Congress gave states the option of either expanding Medicaid or creating private plans for children from low-income families. After California decided to go mostly the private route, the federal government interpreted the law as saying that children on Medicaid are eligible for the free U.S. Vaccines for Children Program, but children on private plans are not.

California is the first state to protest, but “every state that takes the non-Medicaid approach will be subject to the same decision as California,” said Steven Thompson, vice president of government relations for the medical association.

A spokesman for the U.S. Health Care Financing Administration, Chris Peacock, declined to comment on the lawsuit, saying only that “ensuring that all children receive immunization is a top priority for us.”

There had been speculation that the federal agency was responding to pressure from the pharmaceutical industry not to expand the free program, but that does not seem to be the problem, Thompson said. It was probably a decision “made in the bowels of the bureaucracy” that stuck fast, he said.

California, which is set to implement Healthy Families in July, could purchase federal vaccines at a discounted rate, instead of relying on the free program. But that could prove very expensive for the state, costing perhaps $25 million, although the federal government would spend about $43 million, McNeil said.

“We could use that money to cover more children” in the program instead of spending it on vaccines, she said.

The state could require health plans it contracts with to provide the vaccines. But the medical association says the fixed rates that doctors will receive are based on Medi-Cal rates and do not cover vaccination costs. That is a disincentive for doctors to participate in the program.