Showdown on Insuring Poor

A record 7 million Californians now lack health insurance, and Gov. Gray Davis and legislators are heading for a showdown over how to best help them.

Last week, the Legislature earmarked $125 million to extend state-subsidized health insurance to working families with incomes below 150% of the federal poverty line--about $25,000 for a family of four. Davis, however, has told staffers he is highly reluctant to expand what some voters might perceive as a welfare entitlement.

As he reviews the budget with his line-item-veto pen in hand, the governor should distinguish between ambitious health insurance expansion and lesser but thoughtful reforms. In the latter category:

* Encouraging more employers to offer health insurance. A bill by Sen. Jackie Speier (D-Daly City) heading for the governor’s desk would use already allocated federal and state money to help low-wage workers pay job-based health insurance premiums.

* Eliminating laws that encourage people to stay on welfare so they can retain state-subsidized health insurance. The Legislature is now crafting a bill that would eliminate a rule that perversely denies Medi-Cal coverage to a family of four with steady earnings of just under $21,000 a year but guarantees it indefinitely to a similar family that draws welfare benefits for part of the year.

* Streamlining enrollment. A bill by Assemblyman Gil Cedillo (D-Los Angeles) would simplify health insurance eligibility by, for example, allowing applicants to enroll by mail. Fraud could be controlled by vigorous auditing. The state’s Medi-Cal system is strangling on its own red tape. Parents must submit new paperwork every few months to keep their children enrolled, and the rules are so complex that Sacramento and Washington together will spend nearly $1 billion this year just to police Medi-Cal eligibility in the state.

Bureaucratic roadblocks to enrollment are a key reason why the state has been able to extend federally subsidized health insurance to only about 150,000 of its 1.1 million eligible children. Based on California’s high number of uninsured children, Washington allocated $2.5 billion to help the state cover them, providing two dollars for every dollar spent by the state. Because of the poor outreach and failure to come up with the matching funds, however, most of the federal billions might soon go to other, more eager states.

Sacramento’s inability or refusal to take the federal funding is especially unfair to counties, which are reeling under the strain of being the health care provider of last resort. Los Angeles County is especially hard-hit because 35% of its adults are uninsured, compared with 22.7% of adults statewide.

State legislators and Davis can start fixing the crisis not just by tinkering with the number of people insured with public money but also making the state’s programs less cumbersome and helping more employers offer coverage.