Health Funds in Danger

In the last three years Washington has earmarked a whopping $2.4 billion for helping California expand its Healthy Families program to provide health insurance to children from working-poor families. Other states are seizing the federal dollars; why not, with Washington footing two-thirds of the bill? That’s more generous than the federal government’s other health insurance program for the working poor, Medicaid, which reimburses only half of state costs.

California, however, is on the verge of losing hundreds of millions of the federal dollars. So far it has spent only $106 million, and any unspent portion of its original allocation of $855 million in 1997 will revert to Washington in a mere four months.

The problem is not, as one might expect, the match money. Gov. Gray Davis, a fiscal conservative, is famously reluctant to expand state entitlements. But in his new budget, unveiled last week, Davis allocates $59 million to match federal funding for an ambitious expansion of Healthy Families in the coming year and throws in $115 million more for expanding Medi-Cal, California’s Medicaid program.

The problem, rather, is bureaucracy. Neither Davis’ nor Washington’s money can be spent until the state streamlines its byzantine enrollment processes, which deter eligible candidates from enrolling in Healthy Families and Medi-Cal.

For example, working-poor families must re-enroll in Medi-Cal every three months, submitting to an expensive-to-administer “asset test” to see whether they might be squirreling away money in, say, a Swiss bank account. Last week Davis sensibly proposed eliminating the quarterly re-enrollment requirement and using more economical means, like tax records, to rule out fraud. Now, legislators need to get behind him.

Legislators also should pass a bill by Sen. Byron Sher (D-Stanford) that would provide $260,000 in funding to help develop a system for automatically enrolling food stamp and federal lunch program recipients in Healthy Families.

However, the legislative reforms cannot be completed until next February at the earliest--far too late to prevent Washington from repossessing California’s Healthy Families funding.

Healthy Families administrator Sandra Shewry has at least a few other options. Public health researchers say that enrollment in Healthy Families increases most when families hear from other families, or from trusted community groups, that being in the program is a good experience. Shewry can help generate this favorable word of mouth by spending more money on advertising in ethnic, locally based media, by helping families negotiate the incoherent bureaucratic enrollment process and by changing the program’s reimbursement system, which often makes community groups wait months for payment after they enroll someone in Healthy Families. What the shoestring community groups really need is grant money upfront for outreach.

Some state legislators oppose expanding Healthy Families because they fear the costs. However, public health researchers at UCLA will soon release a study showing the economic benefit: When children have insurance coverage and better medical care, they are less likely to miss school due to illness and their parents are less likely to miss work to take care of them.

The governor, legislators and plan administrators need to work in concert. There is every positive reason to make sure that California gets the federal money available to it, and there’s no downside to expanding Healthy Families.