New Bush Policy May Boost Healthy Families

California officials are hoping their long-delayed plan to expand health insurance coverage to more than 300,000 low-income parents and children will become a reality under a new policy announced Saturday by President Bush to encourage state innovations in health care.

California’s ambitious proposal has been stalled for seven months while awaiting federal approval of a special waiver, and state officials expressed hope that it is precisely the type of program Bush wants to break loose from a sluggish bureaucracy.

“For many months we’ve been waiting for some response from the federal government, and at this point we’re still waiting,” said Hilary McLean, chief deputy press secretary for Gov. Gray Davis. “Maybe the president’s [announcement] is the mark of a turning point and if it is, that’s encouraging news.”

In his weekly radio address, Bush said he will direct administration officials to adopt new rules that make it easier for states to alter their health programs for the poor--programs financed largely with federal dollars through Medicaid.

Bush promised the federal government will “act on [state] proposals quickly, without making states wait for months or years for an answer.”

Bush’s policy sparked skepticism in some quarters, with critics saying they fear the change would enable states less generous than California to slash their safety net programs for the poor.

“This is the worst of both worlds: no new federal money for the states and dropping the basic protections for poor people in Medicaid,” said Rep. Henry Waxman (D-Los Angeles). “This isn’t what the states need or what Medicaid advocates want. This is a policy calculated to explode.”

California officials have been frustrated since applying in December for approval to expand a popular program called Healthy Families, which provides heavily subsidized insurance for children in families with incomes up to about $35,000 a year.

Parents pay $4 to $9 a month for each child, enrolling them in health maintenance organization and other insurance programs. California wants to expand the program to cover the parents, because people are more likely to enroll their children if they, too, can receive the protection of low-cost health insurance. Parents would pay $20 to $25 a month for coverage.

The state estimates that if the waiver were granted enrollment would increase by 170,000 parents and 130,000 children within a year. More than 440,000 children are enrolled in Healthy Families.

Despite repeated meetings, conferences and correspondence, Washington hasn’t given permission to California to expand coverage. Because Healthy Families is made possible under federal legislation covering children, it requires a waiver from the federal Department of Health and Human Services to extend coverage to the parents of eligible children.

Some advocacy groups are uncertain but hopeful about what the president’s policy portends.

“I’m hoping that it means that we can expand to new populations like we are asking to do in California,” said Kristen Testa, health program director at the Children’s Partnership, a Santa Monica group that promotes insurance for children. “But flexibility could go the other way, allowing states to erode benefits. We’re hoping the president’s policy will mean expansion.”

State officials thought the terms and conditions of the waiver for California were settled two months ago at staff meetings between officials from California’s Health and Human Services Agency and the federal Department of Health and Human Services. But nothing further happened, state officials said.

Grantland Johnson, director of the state agency, sent a letter on July 27 to the federal health department’s Secretary Tommy Thompson, expressing his frustration: “The effect of holding up approval of California’s waiver not only delays expanded coverage for families, but I believe, is inconsistent with the vision of state flexibility and innovation that you have articulated.”

Thompson, who as governor of Wisconsin developed innovative welfare and health programs in his state, is a strong advocate of giving the states more flexibility in such matters.

“We want to work with California and we will address the issues as expeditiously as possible,” Kevin Keane, the department’s assistant secretary for public affairs, said Saturday in response to inquiries about California’s waiver application. He said there are some “technical problems” with the state’s applications, but did not furnish any details.

State sources familiar with the discussion said one of the stumbling blocks involves calculation of income for eligibility in the program. The state wants to allow parents to disregard a certain amount of child support money they receive when they calculate their income in applying for the program. And those who pay child support also would be allowed to take a deduction to reduce their income for eligibility purposes. Federal officials apparently are balking at permitting those deductions.

State officials are anxious to get the waiver because it would be the first step in an anticipated expansion of coverage. Davis signed a state budget recently that would increase coverage even further, allowing parents with family incomes up to $44,000 a year to enroll in the program. This step would require a second federal waiver.

Healthy Families “has been very successful in California and we are anxious to implement the expansion,” said Bertha Gorman, associate secretary of external affairs at the state health agency.

The expanded coverage would be a huge bargain for participating families. Typically, the uninsured are in families with full-time workers not covered on their jobs and unable to pay for their own coverage. Family coverage deemed adequate often costs $5,000 or $6,000 a year.

Under the proposed waiver requested by California, a family of four would pay $576 to $816 a year in total costs, covering both parents and two children.

The system of health care services for the poor financed by government is complex, for both the participants and the administrators.

Medicaid is the basic program for the poorest Americans--the California version is Medi-Cal. It covers families with annual incomes below 100% of the poverty line, about $17,000 for a family of four.

Healthy Families coverage kicks in for children in families with incomes up to 250% of the federal poverty line.

To complicate matters further, there are different income definitions for families with children under age 6 and other programs for pregnant women and infants.

About 22% of Californians lack health insurance, significantly more than the national figure of 17%.