Children's health hangs in balance

By Daniel Weintraub

The health of nearly 1 million California children hangs in the balance this month as the state prepares to shift responsibility for their care to the troubled, cash-strapped Medi-Cal program from a popular service that subsidizes private insurance coverage, known as Healthy Families.

The administration of Gov. Jerry Brown says the change will save the taxpayers’ money while also improving care for the children. But advocates for kids are not so sure.

Some fear that the change will overload Medi-Cal, which already faces a shortage of doctors. The result could be health care access in name only: families will have a Medi-Cal card entitling them to care but they might not be able to find a doctor near them who will accept their children as patients.

The Healthy Families program serves 870,000 California children – including about 80,000 in Orange County — and has bipartisan roots. It was created in the 1990s when President Bill Clinton and a Republican Congress agreed to expand subsidized health coverage to families where the parents work but don’t have insurance for their children.

Many states accommodated the newly eligible children by simply expanding their Medicaid programs, known as Medi-Cal in California, which historically had served the poorest of the poor. But here, then-Gov. Pete Wilson opted for a public-private program that subsidized private insurance coverage with public dollars in what became the Healthy Families program. The Legislature, then as now controlled by Democrats, went along.

Healthy Families provides coverage to children in families that are poor but who earn too much to qualify for Medi-Cal. Eligibility ends when a family’s income reaches 250 percent of the federal poverty level, or about $55,000 annually for a family of four.

Unlike Medi-Cal, which is essentially free for families who qualify, clients in the Healthy Families program pay premiums for their coverage on a sliding scale. The premiums range from $4 to $24 per child per month depending on a family’s income, with a maximum family premium of $72. Families also pay out of pocket when their children need care, with copays between $5 and $15 per visit and an annual maximum of $250.

A state agency contracts with health plans to provide health, dental and vision benefits to enrollees, and those benefits are required to be at least as good as those available to state employees through CalPERS.

But with the state running deficits and the federal Affordable Care Act promising to cover some of these same children, the governor this year persuaded the Legislature to enact a major change. Brown’s plan will phase out Healthy Families over the next year and shift the children who were getting that coverage to Medi-Cal. Some of those kids will later become eligible for subsidized private insurance after the federal reform takes full effect in January 2014.

Brown hopes to save about $70 million a year because Medi-Cal pays lower rates for care than does the Healthy Families program. And he and his staff say this can be done without affecting the quality of care that children receive. They also note that many of the children now in Healthy Families would have been shifted to Medi-Cal under the federal reform anyway, so for them the state is simply getting ahead of the game.

“We believe the service will be the same or better,” said Toby Douglas, Brown’s director of Health Care Services.

For just under half the children in the Healthy Families program – about 415,000 kids — the transition should go without a hitch, because their current health plans already contract with Medi-Cal. They should keep the same insurer and, probably, the same doctors.

Another 249,000 children are now enrolled in managed care plan that subcontract with another health plan already working with Medi-Cal, according to numbers from the state’s Legislative Analyst. Many of those children are also expected to keep the same doctors.

But at least 150,000 children are now enrolled in health plans that have no relationship with Medi-Cal, either direct or through another contractor. These children will be moved into a Medi-Cal managed care plan beginning next August.

Finally, 43,000 children in the Healthy Families program live in counties where there is no managed care plan that contracts with Medi-Cal. The state plans to move these children’s care to a fee-for-service basis – where doctors treat people independently and then bill the state for each service provided. Later, the state plans to create managed care plans in the counties that don’t have it now, and move children in those counties back to managed care.

It is that potential disruption for about 200,000 children that has advocates worried. Especially since the state has a less than stellar record of late with these sorts of changes.

Earlier this year the state tried to shift children’s dental care to managed care plans, but in Sacramento and Los Angeles counties, reviews showed that children were waiting months to see a dentist while their serious dental problems festered. The state also shut down a program that provided day care, including health services, to older adults, and replaced it with a new program that had tighter eligibility standards. But the transition proved chaotic as seniors and their families struggled to understand who was eligible for the new program and, if they were not, why not.

This time, the big concern is that the managed care plans that contract with Medi-Cal will not have enough doctors to take care of the additional children. Douglas says the state will be doing detailed audits of the provider networks used by the health plans to make sure they are meeting minimum standards.

But at a recent legislative hearing, Assemblyman Rod Wright of Los Angeles questioned state officials about how they would enforce rules requiring health plans to have enough doctors to serve their members. He noted that’s not now the case in much of his district. And he wondered what leverage the state would have, since kicking a health plan out of the program would only make the shortage worse.

Gary Baldwin, a lawyer for the Health Care Services Department, conceded that it can be difficult for the state to hold the health plans accountable.

“If you put pressure on a plan to withdraw from a particular service area, I’m not sure that does anyone any good because then they have fewer health care options available,” Baldwin said. “It’s a case by case approach.

Assemblyman Tom Ammiano of San Francisco said Democrats were generally opposed to the switch but went along with it under pressure from the governor. Now, he said, they will be watching to be sure that the Administration implements the transformation in a way that, as Brown promised, would not undermine care for the children involved.

“We were very much reluctant brides voting for this,” Ammiano said. “We were worried about it…We did vote for it and we’ll take the heat for that. But that does not mean we’re going to roll over and let anything happen that would betray the trust that that vote represented.”

Daniel Weintraub has covered California public policy for 25 years. He is editor of the California Health Report at


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