Health Care: The States Step In

Congress’ failure to pass any of its promised health care reforms has made local solutions all the more necessary, especially for working-poor families. Fortunately some independent-minded governors, including California’s Gray Davis, are meeting the challenge. While George W. Bush, Al Gore and other campaigning politicians have seldom strayed beyond noncontroversial calls for expanding Medicare benefits to seniors, these governors are at the finish line on ambitious but cost-efficient expansions of public health insurance.

Like his GOP counterparts in New York and Wisconsin, Davis earlier this fall committed the state to expanding its Healthy Families program to cover not just children of working-poor families but their parents as well. As early as this week, Davis is expected to disclose the details of that expansion, and related reforms in the state’s other public health insurance programs, in a letter to Health and Human Services Secretary Donna Shalala.

Davis had to act now because otherwise the Clinton administration could repossess $420 million in health insurance funding that California failed to spend by a federal deadline this year. That would be an intolerable loss to areas like Los Angeles County, where 31% of all nonelderly residents lack health insurance.

Beyond expanding Healthy Families, two reforms are especially urgent:

* Streamline Medi-Cal and Healthy Families to create a seamless program. Currently a mother and father with an income just over $21,000 and children ages 4 and 6 would have to enroll their younger child in Medi-Cal and their older child in Healthy Families. In some counties, the younger child would be eligible for two plans, while the older child would be eligible for six plans, but only one plan would be available to both. Moreover, the younger child would have to be re-enrolled in Medi-Cal every three months at the local county welfare office, while the older child’s plan would be processed once a year through a private contractor in Sacramento. Go figure.

* Eliminate the “asset test.” Each year California counties spend $1 billion administering the Medi-Cal program--mainly holding face-to-face meetings with recipients to ensure they are not hiding assets that might disqualify them. Not a penny of that goes to delivering health care. The money might be well used if it ferreted out fraud or corruption, but few families are found to be ineligible. Many states have waived the asset test entirely, and Davis has waived it for pregnant women and some children, though not yet for parents.

Public health insurance is currently full of perverse incentives that should offend Democrats and Republicans in equal measure--like the fact that people who stay on welfare get Medicaid, while those who leave welfare for low-wage work are often unable to obtain any sort of health insurance. As many governors across the country are realizing, expanding public health insurance is the only way to remedy those problems.