U.S. to Back State Plan to Help Insure More Poor

The Bush administration is poised to approve a California program to provide insurance to 300,000 working poor parents, by far the largest of its kind in the nation, administration sources said Wednesday.

The move, hailed by health-care advocates, would allow the state to expand insurance coverage to parents of low-income children now eligible for the Medi-Cal and Healthy Families programs.

But the decision also places California Gov. Gray Davis in a tough spot as he seeks reelection this year. The politically popular expansion, though funded mostly by the federal government, still requires hundreds of millions of dollars in contributions from the cash-poor state.

Davis supported the expansion in 2000, when state coffers were full. But late last year, faced with a $12.4-billion shortfall, he proposed delaying the start of the program until July 2003. That is projected to save $54.3 million in the current fiscal year and $160.5 million the following one.

For every dollar the state saves by delaying, however, it would sacrifice twice that much in federal matching funds--$430 million over two years.

A Bush administration official said Wednesday that federal health officials would not approve the expansion if they did not believe California could afford it.

The approval by U.S. Department of Health and Human Services Secretary Tommy G. Thompson is expected to be formally announced Friday in Los Angeles. It comes about six months after he signaled that the weakening economy might make it impossible for the Bush administration to follow through on the president’s vow to expand coverage to 39 million uninsured Americans.

The White House’s decision to give the nod to California immediately provided fodder in what is shaping up to be a tough gubernatorial campaign.

Former Los Angeles Mayor Richard Riordan, one of Davis’ GOP rivals in the race, responded to the news by calling Davis’ proposal for delay “terrible.”

“People have a God-given right to health care,” Riordan said while on a campaign swing through the Salinas Valley. “How can a human being like Gray Davis deny that to them? I think it’s despicable.”

Davis spokeswoman Hilary McLean defended the governor’s decision to delay the expansion. Davis, she said, designed his budget based on “our best understanding and estimate of our budget realities.”

“The governor’s proposal is not to walk away from this [expansion],” McLean said, “but it’s certainly to follow through on the commitment to expand Healthy Families when we have the resources to do so.”

Another Davis administration official questioned the timing of the federal approval.

“Where were the feds when we needed them a year ago?” asked Glen Rosselli, the undersecretary of the state Health and Human Services Agency who has overseen the expansion request.

Through Medi-Cal and Healthy Families, California provides medical coverage to about 1 million children whose families earn less than 250% of the federal poverty level. That comes out to $44,125 per year for a family of four.

The proposal to be approved by the Bush administration would expand coverage to working parents earning up to twice the federal poverty level, which equals about $35,300 for a family of four.

Eligible parents would receive a benefits package similar to that offered to children in the Healthy Families program, including physician visits, hospital stays, prescription drugs and mental health coverage. Families generally would pay premiums of $10 to $20 per month, depending on income.

Children’s advocates have argued forcefully that extending health coverage to parents would increase the likelihood that their children will be enrolled.

Despite the brewing political controversy, news of Thompson’s impending decision was welcomed by California’s Democratic lawmakers in Washington.

“If this is true, it is very good news,” said Sen. Dianne Feinstein.

The state initially requested approval from Washington for the program in December 2000, at the end of the Clinton administration. Advocates--and Davis administration officials--long had criticized the federal government for moving slowly on the proposal.

Now, some advocates are parting ways with the Davis administration, saying that any delay by the state would be “penny-wise and pound-foolish.” California has the fourth-highest rate of uninsured people in the nation.

“The Davis administration can’t say that the feds are presenting any barrier,” said Amy Dominguez-Arms, vice president of Children Now in Oakland. “We would be able to do this now but for the fact that the governor is saying, ‘Let’s delay it.’ ”

Jim Keddy, director of the PICO California Project, a faith-based group that advocates for the poor, said his group recognizes that the state is in a budget crisis.

But “on the other hand, this is a program that the federal government matches two to one with every state dollar. When you look at the big picture, the benefits outweigh the costs.”

If California goes forward with the program, it would be by far the largest expansion of health coverage to low-income parents in the country. Arizona was granted federal approval last month to extend coverage to about 25,000 uninsured parents eligible under new more flexible federal guidelines.

Even amid a budget crisis and in the heat of a gubernatorial contest, key state Democratic leaders were pleased at the expected federal go-ahead. “Hopefully we’ll be able to do this. It’s something I want to do. It’s something the Democrats want to do,” said Senate Leader John Burton (D-San Francisco).

State Sen. Martha Escutia (D-Whittier), among the strongest advocates of the program, said she “never agreed” to Davis’ proposal to delay the start of the program’s expansion until 2003.

Legislative subcommittees working on the state budget had been planning to vote today on Davis’ proposal to delay the insurance expansion. But once word spread that Bush was approving the federal expenditure, at least some lawmakers were reconsidering their support for Davis’ proposed cut.

Still, one of Davis’ GOP rivals supported the delay given the current budget woes.

“Healthy Families is a worthy program that we’d like to expand, but until we fix the mess that Gray Davis has put the state in, unfortunately we can’t afford it right now,” said Jeff Flint, a spokesman for businessman Bill Simon.

Secretary of State Bill Jones, another GOP candidate, could not be reached.

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Garvey reported from Washington; Ornstein from Los Angeles. Staff writers Michael Finnegan and Dan Morain contributed to this report.