Times Staff Writer

Gov. Arnold Schwarzenegger will propose that all Californian children, including those in the state illegally, be guaranteed medical insurance as part of the healthcare overhaul he intends to unveil next week, according to officials familiar with the plan.

If enacted by the Legislature, his proposal would affect about 763,000 children who now lack insurance. Although the administration has not revealed details of how it would pay for such a program, officials estimate that extending insurance to all children could cost the state as much as $400 million a year.

That would be a small piece of Schwarzenegger’s stated goal: to ensure medical coverage for all of the 6.5 million Californians who now have none. Experts say that could cost upward of $10 billion a year.

If successful, the governor’s effort to cover all children would be a substantial political feat. Only a few states guarantee coverage for all those under 18. Schwarzenegger himself vetoed a measure to cover all children in 2005, complaining that lawmakers offered no way to pay for it.


California’s Republican legislators, who blocked a more modest effort to extend healthcare coverage last year, are sure to rebel against a plan that includes children of illegal immigrants.

Schwarzenegger is scheduled to announce his full health plan Monday. His office is still finalizing many parts of that package, but aides have made clear that it will be an ambitious effort to restrain healthcare costs and reduce the state’s uninsured population.

All sectors of the healthcare industry, including hospitals, insurers, doctors, patients, businesses and government, would pay some of the costs under Schwarzenegger’s plan. People familiar with the proposal say that it includes new requirements for businesses to cover employees, though the details were unclear. The more cost shouldered by employers and workers, the less the state would have to spend.

In addition, a number of measures favored by some aides, such as limiting the profits of insurers, remain undecided.

“There is no final health plan,” said Adam Mendelsohn, Schwarzenegger’s communications director. “As has been the case from the start, all ideas are on the table and the final touches are being applied. The administration is not confirming the inclusion of any one piece.”

But several independent sources said Schwarzenegger had committed to the framework of the children’s insurance portion. Administration officials have privately told people outside government that they intend to guarantee medical coverage for children of families earning up to 300% of the poverty level, or $60,000 a year for a family of four. Those families have 90% of the children without insurance. But the cutoff is not yet set in stone.

Schwarzenegger’s proposal goes further than one put forward last month by Senate President Pro Tem Don Perata (D-Oakland). His plan excluded illegal immigrants. Assembly Speaker Fabian Nunez (D-Los Angeles) incorporated children of undocumented residents into his plan, which also was announced in December.

“A lot of us are really looking to [Schwarzenegger] for leadership,” said Wendy Lazarus, founder of the Children’s Partnership, a nonpartisan child advocacy group based in Santa Monica and Washington, D.C. “Assuming he is going to tell us that he is going to cover all kids, this is great news for California’s kids.”

About 90% of California’s children already have insurance, either through their parents’ coverage or through state Medi-Cal programs that help the impoverished. For years, advocates have been pressing lawmakers to finish the job, arguing that the electorate would be sympathetic to the plight of children.

“It’s the low-hanging fruit of the healthcare reform debate,” said Dr. Bob Ross, president of the California Endowment, a private foundation in Los Angeles that was created to push for expanded access to healthcare.

“Kids are relatively cheaper to cover” than adults, he said. “From a public health standpoint, it’s smarter to cover all children regardless of immigration. You just don’t want unimmunized kids surfing around in the population.”

Such arguments have yet to win the day in Sacramento. Last year, Schwarzenegger backed a budget plan that would have helped fund local children’s initiatives. Republican lawmakers blocked the proposal, because it would have included coverage for children of illegal immigrants.

“We believe Californians do not want to reward illegal behavior,” said Assembly Republican leader Mike Villines of Clovis. “There are so many here [legally] who are hurting and trying to make ends meet, we’ve got to focus on them first.”

The GOP is a minority in both houses of the Legislature, but most proposals involving state spending require a two-thirds vote, giving Republicans the power to stop them. However, it is possible that Schwarzenegger’s plan could be molded to need a simple majority vote, like the last major piece of healthcare legislation to become law.

That measure, a 2003 mandate that most employers provide insurance for their workers, was repealed by voters the following year.

Schwarzenegger has taken incremental steps to expand existing programs aimed at children’s health, including the addition of $80 million to the state budget last year.

Martha Escutia, a former Democratic state senator from Whittier who pressed for coverage of all children, including those of illegal immigrants, said Schwarzenegger told her in 2004 that he agreed with her.

“I said very bluntly that there was no way we could distinguish between children based on legal status,” she recalled Wednesday. “And the governor agreed. He said, ‘Children are children.’ I remember him saying that very clearly.”

Sixty-nine percent of Californian children without health insurance in 2005 were eligible for existing programs but were not enrolled, according to the UCLA Center for Health Policy Research.

That was due to a variety of factors, including inadequate funds in some county programs to cover all those who qualified, and some of the bureaucratic requirements for entering state programs.

Many parents, for instance, are required to prove that their earnings are low enough to qualify their children.

There is disagreement about how many of the uninsured children are here illegally. A 2003 UCLA survey said that 33% were not citizens, but that does not mean that they were in the country illegally. Ross, of the California Endowment, said the number was below 15%.

Most of the other states that already guarantee coverage for all children do it through state-paid programs for those from poor families, and by allowing better-off families to cover their children by paying a portion of the costs for the same programs.

Typically, the more a family earns, the more it pays. Connecticut, Illinois, Maine, Maryland, New Hampshire, New Jersey and Vermont all have such programs.

Lazarus, of the Children’s Partnership, said that although California would not be the first to cover all children, it has fewer employers providing insurance and more illegal immigrants than other states, making coverage more challenging.

“For California to step up at this time when states and Congress are really focused on healthcare reform means that California could have a really significant leadership role across the nation,” she said.




$400 million

projected cost of extending insurance to all California children


uninsured children would qualify for coverage

6.5 million

Californians have no health insurance