Board Approves Option to Drop Children from Health Program

California has a collection of medical insurance programs aimed at providing healthcare to those who can't pay for it. The board that runs one of those programs yesterday adopted rules so it can drop children from the program. KPCC's Julie Small says those new rules are one of many steps California has to take to provide health insurance to the poor when it doesn't have enough money to do it.

Julie Small: "Healthy Families" is a health insurance safety net in California. It covers children from families that don't have insurance, but aren't poor enough to qualify for Medi-Cal. The federal government funds Healthy Families with some help from the state, and California's Managed Risk Medical Insurance Board runs the program.

At a hearing yesterday in Sacramento, that board adopted new regulations so it can drop children from Healthy Families. Why do that? Laura Rosenthal, one of the Insurance Board's attorneys, says the answer is complicated.

Laura Rosenthal: Adopting the regulations is not a decision to disenroll or "wait list" children. It is a necessary legal tool that the board should have in place.

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Small: In place in case there's not enough money from the feds or the state to cover all the children enrolled in Healthy Families. The Insurance Board's Ronald Spingarn explains it this way:

Ronald Spingarn: By law, the board has to have the authority to manage the program within its financial resources.

Small: Resources the board can't control, like federal funding. Spingarn says last fall, the Insurance Board got a rude awakening on that score.

Spingarn: When there was a federal stalemate between the president and Congress to provide us with funding for five years, they never did provide us with funding for five years. They just provided us funding for a year-and-a-half.

Small: When that happened, it looked like Healthy Families might run out of money. The Insurance Board had to adopt temporary rules so it could put some kids on a wait list, or drop some kids from the program altogether. As it turned out, it didn't have to do either.

That's why health care advocates at yesterday's hearing wondered why the Insurance Board had to adopt permanent rules now. Michael Arnold with the California Children's Hospital Association worried how federal lawmakers would see this move.

Michael Arnold: If this action is seen by the federal government as basically saying, "OK. We can implement the kind of cuts that you've been talking about," we think that would be the wrong signal for the state of California to send.

Small: Others worried the new rules could scare away parents whose kids might be eligible for Healthy Families. And then there was Lillian Clark, a single mom from Sacramento who has two daughters. The younger one needs daily medicine administered by a doctor or nurse. She was getting that for free from Medi-Cal, but then Medi-Cal sent a letter.

Lillian Clark: The letter stated that my children were being dropped from transitional Medi-Cal, and that my share of cost to state on Medi-Cal would be nearly $1,800 a month. I almost dropped dead after reading this.

Small: Clark scrambled to get her kids enrolled in Healthy Families. It took her six weeks, but she got it done, and now the Insurance Board is talking about maybe dropping kids.

Clark: My first thought was, "No! Why are they going to kick me off? I just got on!"

Small: The Medical Insurance Board expressed sympathy, but still adopted the new rules unanimously. Ronald Spingarn says their hands are tied. The board can only spend the money it has. It has to be ready to cut back Healthy Families if the feds or the state don't come up with enough money to run it.

Spingarn: If the board can foresee this being a problem in the future, they have a responsibility to address it now before it becomes an emergency.

Small: It could be a problem in the very near future. State funding for Healthy Families might fall short this year if the legislature adopts Governor Schwarzenegger's proposed health care cuts. And that federal funding? That's up for renewal early next year, after a new president moves in to the White House.