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Thinking About Children’s Coverage

We need to thank the Brown Administration for their efforts to provoke all of our best thinking on the best way to cover California’s children in 2011, 2014 and onward. They propose to shift the 900,000 Healthy Families children into Medi-Cal beginning January 2012. Healthy Families covers uninsured children with family incomes between 100% ($22,350 for a family of four) and 250% of FPL ($56,250 for a family of four). The predicted General Fund savings are anticipated to be roughly $30 million this year and $100 million annually thereafter. The General Fund savings are matched by federal fund savings of $200 million annually.

The Administration’s proposal is driven by state budget exigencies that cannot be ignored. The savings are achieved based on the assumption that Healthy Families pays $100 per child per month for health, dental and vision, while Medi-Cal would pay about $75 per child per month. One reason for the premium difference is lower payments to doctors/dentists and thus less access to participating providers in Medi-Cal. On the other hand, Medi-Cal does cover more benefits with lower copays and other out-of-pocket costs than Healthy Families. Other differences are that Medi-Cal contracts with fewer health plans, offers less plan choice, and has a more complex, costlier and slower enrollment process. Some groups are quite supportive of this proposal due to the stronger legal protections and entitlement features of Medi-Cal. Others are opposed due to the cuts in reimbursement and access. The Administration is seeking solutions to Medicaid’s limitations to dental and rural access, as well as the program’s application and enrollment challenges.

Under federal reform in 2014, federal funds will be available to cover most of California’s uninsured , whereas, now they are only available for a portion of California’s uninsured children. In 2014, federal funds will be available to help pay for coverage for uninsured families with incomes up to 400% of FPL ($88,000 for a family of four), which are currently only available for parents up to 100% of FPL ($22,000 for a family of four) and children up to 250% of FPL ($56, 250 for a family of four). Federal reform would have “bright line” eligibility at 133% of FPL ($29,790 for a family of four) between the Medi-Cal program (public insurance) and the Exchange (private insurance). In fact, the description of public insurance vs. private insurance is somewhat misleading in California, as both programs contract with health plans, private and public. But the inescapable difference here in California is that Medi-Cal pays lower rates and private insurance pays higher rates; therefore Medi-Cal has had greater difficulty in securing participation by private doctors and dentists.

My vision is as follows: we should keep parents and their kids in the same program, with the same plan, the same family doctors and the same provider network. This is simpler for families, for doctors and for program administrators. As a practical matter, that would mean uninsured families with incomes of less than $30,000 for a family of four would be eligible to participate in Medi-Cal, and families with incomes above that level would participate in the Exchange (where refundable tax credits help pay their premiums and cost sharing). The Exchange would then administer the Healthy Families program for children with family incomes 133-250% of FPL, and Medi-Cal would cover uninsured children with family incomes less than 133% of FPL beginning in 2012.

Some have suggested different eligibility standards/rules for children as distinct from their parents. In my view, the same income threshold and counting of income should be used for all to make the programs so much easier to understand and administer.

The legislature is also considering the federal option to develop a Basic Health Plan. This could be designed to look like Medi-Cal, or a slimmer “benchmark” package of benefits, or it could be more comparable to Healthy Families. This option could be constructed to weaken participation in the Exchange, or it could be administered as one of the options offered to subscribers by the Exchange.

What should happen to other California programs for children, such as CCS (California Children’s Services), AIM (Access for Infants and Mothers) or CHDP (Child Health Disability Prevention Program)? They should follow the same split, moving programs for lower income children into Medi-Cal and higher income children into the Exchange.

What should we do in the interim (2011-2014)? We could carefully transition most of the MRMIB (Managed Risk Medical Insurance Board) programs (Healthy Families, AIM and MRMIP) and staff into the newly formed Exchange and the Healthy Families children in families with incomes less than 133% of FPL into Medi-Cal.

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