Davis Asks U.S. for Money to Insure Children

SACRAMENTO —  With the state government considering deep cuts in health programs to address its budget shortfall, Gov. Gray Davis has asked the Bush administration to allow California counties to tap tens of millions of available federal dollars to cover uninsured children.

Federal approval of what the Davis administration is calling a “first-in-the-nation” proposal would allow California to expand medical coverage to about 50,000 children whose families don’t have private health insurance and aren’t covered by government programs for the poor.

“We need to be creative about ways in drawing down federal funds at a time when there aren’t a lot of state funds,” said Daniel Zingale, the governor’s cabinet secretary. “This is part of the overall conversation of how do we address the fact that there are over 6 million Californians without health coverage.”

Davis aides said they hoped that California counties would be allowed to use local -- rather than state -- money as a required match for available federal money under the State Children’s Health Insurance Program. If approved by the federal government, which has not authorized other states to pursue money in that way, it would give California counties a chance to tap into matching funds that the state can’t access in such tight budget times.

But the federal Center for Medicare and Medicaid Services was noncommittal. The California proposal is “under review,” said a spokesman, who didn’t want to be identified.

In recent months, the Bush administration has rebuffed broader appeals for financial assistance from struggling states. It is unclear whether the Republican administration is prepared to make such a fundamental change in how Washington administers medical and other programs at the state level as the California proposal envisions.

Given that there is little incentive for the Republican White House to aid a Democratic governor, some questioned the practical results of the Davis initiative. They cast it as an attempt by Davis to affirm his commitment to a popular issue without having to commit new money in a critical budget year.

“It sounds like a no-lose proposition for Davis,” said Republican political consultant Dan Schnur. “If the federal government says yes, a lot more California children get covered and it doesn’t cost Davis a dime. And if the feds say no, then he goes back to scapegoating the Bush administration for all of California’s problems.”

‘Silver Lining’

Some health-care advocates, however, praised Davis’ proposal as an innovative way to reduce the number of uninsured children at a time when legislators are considering budget proposals from the governor that could eliminate medical coverage for more than 500,000 low-income Californians.

“It’s a silver lining in a very gloomy health-care sky in the budget,” said Anthony Wright, executive director of Health Access, an advocate of expanding health coverage to uninsured Californians. “It obviously pales in comparison to the impact of the budget, but these efforts do help deal with the problem of lack of access to health care.”

The California proposal is an outgrowth of legislation signed by Davis two year ago, Assembly Bill 495, by Assemblyman Manny Diaz (D-San Jose). The bill authorized the state board that oversees the Health Families program for working poor families to help counties and local agencies obtain federal money for children’s medical programs.

State officials and Davis aides have worked with local, county and federal officials to find ways to tap into the available federal money.

Under the federal State Children’s Health Insurance Program (SCHIP), a state can receive $2 in federal funds for every $1 it spends on programs that provide health care to the children of working poor families. But, facing severe budget constraints, California wasn’t able to claim $700 million in available funds last year because it could not meet the matching funds requirement, and the state is expected to forgo $98 million this year, administration officials said.

The Medi-Cal program -- the California version of Medicaid -- provides medical coverage to families with incomes up to 133% of the federal poverty level. The Healthy Families program provides medical coverage for children whose family income exceeds Medi-Cal levels and extends up to 250% of the federal poverty level, which would be $46,000 in annual income for a family of four.

Davis administration officials would like to expand the Healthy Families program to 300% of the federal poverty level, or $51,000 of annual income for a family of four, but the state can’t afford it. With the state facing a budget shortfall of as much as $35 billion over the next 15 months, some local governments are addressing the problem on their own. The Davis appeal for a waiver of existing federal requirements is aimed at helping these and other counties.

Four counties -- San Francisco, Alameda, Santa Clara and San Mateo -- recently launched programs that provide health coverage to children whose family income ranges from 250% to 300% of the federal poverty level, just above eligibility for Healthy Families. The programs are modeled closely on Healthy Families.

Four other counties -- Los Angeles, San Bernardino, Santa Cruz and San Joaquin -- are planning to launch similar programs. More counties are expected to follow suit, preferring to find a way to provide preventive health care rather than face much higher emergency care costs in the future, said health experts and Davis aides.

The Los Angeles program, which is called Healthy Kids, is scheduled to begin in July, providing coverage to children up to 5 years old, with plans eventually to cover children up to 18, said Tangerine Brigham, chief of staff of L.A. Care Health Plan, the nonprofit, public agency that provides managed health care to Medi-Cal and Healthy Families patients.

There are 570,000 uninsured children in Los Angeles County, the Department of Health Services estimates.

Allowing the county to tap federal funds now available for the Healthy Families program would enable Los Angeles to “better ensure the health of our children,” Brigham said.

‘Positive Thing’

Sheila Shima, who oversees the county’s health budget for the chief administrative office, said the federal dollars “could actually help us preserve or expand health-care access for children and families. We view this as a positive thing.”

If the California proposal is approved, the state would act as a facilitator between local governments and Washington, helping counties prepare paperwork and meet eligibility guidelines and funneling federal money back to the counties, Zingale said.

Beth Capell, a lobbyist who specializes in health-care issues, said she was optimistic that the federal government would approve the California proposal because its goal is to expand coverage to the children of working poor families.

“The federal government is more willing to do this for children’s health coverage,” Capell said.

Approval of the Davis administration request probably would not affect children whose families may lose their health coverage because of budget cuts the governor has proposed and the Legislature is considering, health experts said. Federal requirements wouldn’t allow children who are eligible for Medi-Cal, for example, to receive coverage under a program for families in a different income bracket, such as those covered by the Healthy Kids program in Los Angeles County and similar ones across the state.

Davis is pressing the Legislature to approve budget measures that would result in the loss of health insurance for more than 500,000 poor and elderly Californians, officials estimate.

In a letter to legislative leaders, administration Finance Director Steve Peace this week urged lawmakers to make the cuts to Medi-Cal and other social service programs immediately. He warned that failure to do so would result in the state’s losing about $180 million of potential budget savings for the coming fiscal year.

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Times staff writers Sue Fox and Evan Halper contributed to this report.