HEALTHY FAMILIES: Blue Cross Withdrawal May Jeopardize Start Up

      Blue Cross of California's last minute decision to back out of a contract to administer Healthy Families, the state's children's health insurance program, has plunged start-up plans for the program into "disarray." The Wall Street Journal/California Edition reports that "insiders say that, in the wake of Blue Cross's withdrawal, there's little chance the" program will begin July 1 as scheduled. And "the delays could grow even longer," as the Health Care Financing Administration has yet to approve "the overall blueprint for Healthy Families." In addition, federal officials "have some serious qualms about certain aspects of the state's approach -- everything from the inclusion of childhood vaccines; to the proposed copayments that health plans could charge; to what sort of company should be allowed to administer the program."

Time To Move Forward
      Gov. Pete Wilson, however, "insists on pressing ahead, even without Washington's blessing." Sandra Shewry of the state's Managed Risk Medical Insurance Board, the state agency overseeing the contracting process for Healthy Families, said "she expects to recommend that the administrator's contract be given to one of the three remaining finalists from the previous round." However, that action could leave the state "mired in a whole new set of problems," the Journal reports, because one of the other finalists for the contract, Health Net, would also "be both the program administrator and a participating health plan." If Health Net is selected as the new administrator, "Washington officials could wind up nixing the entire setup." Richard Chamber of HCFA's San Francisco office said, "We're still looking at potential inherent conflicts" of interest. He warned that if the state "ultimately ignores his agency's guidelines," it "could find itself stripped of hundreds of millions of dollars in federal matching funds." However, Leona Butler, CEO of the Santa Clara Family Health Plan, said, "The state has played this game before. It's kind of like Russian roulette." She said that the "federal government tells it 'not to go ahead, and the state tries to anyway'" (Benson, 3/11).