CMS Delays Scrutiny of Plan To Fund Healthy Families With Tax
Federal officials have announced that they will postpone a decision about whether California can tax health insurers to replenish funding for Healthy Families, the state's Children's Health Insurance Program, the Los Angeles Times reports.
Earlier this year, state legislators passed a measure (AB 1422) designed to counteract Healthy Families' recent budget cuts by extending a 2.35% tax on insurers that administer benefits for Medi-Cal, California's Medicaid program.
Officials planned to use the tax to draw down nearly $100 million in federal matching funds.
The tax, along with the bill's other provisions, aimed to generate enough revenue to prevent Healthy Families from disenrolling nearly 700,000 children.
Dialogue With Federal Officials
However, the plan hit a road block earlier this week when federal officials said the tax might not meet certain requirements.
In response, Gov. Arnold Schwarzenegger (R) and legislative leaders sent a letter urging HHS Secretary Kathleen Sebelius to postpone a decision about the tax because of California's ongoing budget strain.
On Thursday, CMS Director Cindy Mann sent an e-mail informing California officials that her agency would delay a final decision on the issue until at least mid-2011.Mann's decision will allow Healthy Families to continue operating under AB 1422 as planned. State officials also said the delay might allow California to regain some financial stability and reassess whether a possible health care overhaul might provide new support for Healthy Families (Bailey, Los Angeles Times, 12/18). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.