Ambitious Health Care Expansion Far From Certain

The Legislature decided in the final hours of its session last week to extend the government-sponsored Healthy Families program to 600,000 low-income parents but failed to pass a measure to pay for the expansion.

Even without a clear decision on funding, the move to broaden the program was hailed by many last week as a significant step toward patching gaping holes in California’s health coverage for the working poor.

Still, major uncertainties remain--starting with whether Democratic Gov. Gray Davis will sign the expansion legislation now on his desk.

Then there is the question of money. The federal government picks up two-thirds of the cost of Healthy Families, but the state needs to provide the rest. The state share for expanding the program would be $128 million a year, and in the absence of a bill on funding, where that money would come from remains unclear.

Finally, the federal government also must give special approval for the expansion.

The legislation would allow parents to sign up for the Healthy Families program, which up until now has been available only to children. The program covers families that make too much money to qualify for Medi-Cal but are generally too poor to afford private insurance.

The expanded program would cover parents whose income is up to 250% of the poverty level. The 250% level is roughly equivalent to a family of four making $43,000 a year.

Despite the uncertainties, Assemblyman Martin Gallegos (D-Baldwin Park), who was one of the main sponsors of the legislation, said he remains optimistic.

“This is a big dent in the uninsured population,” he said. The expansion--passed on the last day of the Legislature’s two-year session--would cover about a tenth of the 5.5 million uninsured adults in the state, he said.

“It’s an extremely good thing,” said Lucien Wulsin of the Insure the Uninsured Project in Los Angeles County. “Our big problem in California is we have extremely low coverage for this working population.”

California has the largest uninsured population in the nation--about 7.4 million adults and children. Los Angeles is particularly overburdened because of a huge immigrant population working in low-wage jobs that offer no coverage.

Even if the expansion of Healthy Families goes through, the state most likely will have to return more than $300 million in federal money. That is because California has not managed to enroll as many children as it had anticipated.

But if the state fails to expand the program, California would have to return a total of $590 million.

Despite the Legislature’s failure to pass the financing bill, the governor could choose to pay for the program either from the state’s general fund or from the money California is receiving from the nationwide settlement of state lawsuits against tobacco companies, Gallegos said.

Several state government sources and policy analysts said political pressure remains strong to expand the program so the state can take advantage of at least some of the federal dollars.

Expanding the Healthy Families program would enable California to take a leap in increasing coverage to the working poor at a time when coverage of the uninsured is once again an issue in the national political campaigns, said Larry Levitt, a vice president at the Kaiser Family Foundation, an independent health policy institute.

Several other states, including New York and Massachusetts, have expanded their health coverage programs to adults, but California’s proposed expansion would be among the most generous.

The state says 639,000 children are eligible for Healthy Families and more than half have been enrolled. But research at UCLA has indicated that the state’s estimates of eligible children are far too low. All told, there are about 2 million uninsured children in California.

Beth Osthimer, a senior attorney at Neighborhood Legal Services in Los Angeles County, said she is confident the Healthy Families program eventually will be expanded to adults. But she is concerned about how the expansion will be implemented, given past bureaucratic glitches in the program and in Medi-Cal.

Critics have cited a variety of reasons to explain why Healthy Families has not enrolled as many children as planned: initially poor outreach, complex application forms, confusing eligibility rules and fears of jeopardizing family members’ immigration status.

Many of these problems have been addressed, at least in part, but critics said that the state must be careful to do a better job of attracting whole families--adults and youngsters--if the Healthy Families expansion goes through.

Including parents in Healthy Families coverage will, in itself, improve children’s chances of being covered, research has suggested.

Osthimer said the state should aim to create a “seamless” system that would be easy to sign up for, remain covered by and understand. She suggested better integration of the Medi-Cal and Healthy Families programs.

Currently, in one family, “one child can be on one program, another child on another and the parents can be on nothing,” she said.

“We have to have the ability to treat families as a single entity and not pick them off by age, by disease, by gender or by body part.”