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California’s Healthy Families Health Insurance May Be Restored

Posted Sep 07 2012 11:07am

California’s Governor Jerry Brown made a controversial move earlier this year to end the state’s Healthy Families Insurance Program for low-income children and cover them through Medi-Cal which is the state’s version of Medicaid.  This change to children’s health insurance in California was an effort to drastically cut costs, but is it working?  Now a bipartisan group of lawmakers is trying to restore the program and increase funding.

According to San Mateo County’s The Daily Journal, Healthy Families is California’s version of the State Children’s Health Insurance Program which was a move by Congress in 1997 to offer coverage to children from low-income households who do not qualify for Medicaid.  California has more children in the program than any other state with over 1.7 million children enrolled in 2010 which is significantly more than the next highest state of Texas.  It just goes to show how important this program is and while saving money is important, ensuring children have quality health insurance coverage should be a priority.

Governor Brown and his administration argue that making Healthy Families part of Medi-Cal will save the state about $72 million a year because the state pays physicians much less through Medi-Cal.  They also point out that Medi-Cal actually provides better coverage for certain types of treatment including mental health care and could save on monthly premiums.

It is possible though that this shift will cost the state more than it will ultimately save.  The federal government covers 2/3 of the cost of Healthy Families but pays only 1/2 of Medi-Cal costs.  In addition to this point, Healthy Families was financed by a tax on Medi-Cal managed care plans which brings in about $180 million a year and even more in the future.  This tax has expired and it may not be reinstated unless Healthy Families is restored.

Another downside to transitioning the child plan is that is forces thousands of children to change their insurers and physicians before the federal health care reform plan provides new ways for them to get coverage.  Most of these qualified families will be receiving healthcare from private health insurance companies through a subsidized exchange and no longer from Medicaid.  It makes sense that Healthy Families should be kept in tact at least until the changes from health care reform are in place and transition can be minimized as much as possible, making it easier on struggling families.

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