New Report Offers Healthy Families Alternatives

The state wants to shift 875,000 children in the Healthy Families program into Medi-Cal over a nine-month period, beginning in October. The state estimates the move will save $156 million over the next two fiscal years.

But according to a soon-to-be-released study, that plan could limit access to care for California’s children, and the state might be better served to move more slowly.

A report commissioned by the Urban Institute looked at four possible directions for the Healthy Families program. Report author Stan Dorn said the move to Medi-Cal has some definite advantages for California children — particularly for those at or below 133% of the federal poverty level. Those children will make that transition in 2014 anyway, as required by the Affordable Care Act.

“In our opinion, children’s interests would be best served by moving those lowest-income children into Medi-Cal first,” Dorn said, “and then seeing how that works before moving ahead with the other Healthy Families children. And that’s a very different approach to doing it in this tiered way [over a nine-month timeframe].”

According to the California Medical Association, those lower-income children make up only about one-quarter of Healthy Families children, but the state hopes to transition the whole population to Medi-Cal by July of 2013. That’s a concern for Dorn, who said that fewer physicians are available for Medi-Cal patients compared to Healthy Families, and that adding nearly a million children onto the Medi-Cal rolls could mean limited access.

The Department of Health Care Services issued a written statement about the state’s plans for Healthy Families — California’s version of the federally subsidized State Children’s Health Insurance Program:

“Per the proposed 2012-13 budget, Healthy Families Program (HFP) children will transition to DHCS as part of the broader Medi-Cal program over a nine-month period beginning in October 2012.  DHCS has developed a thoughtful approach to transition all 875,000 HFP children to Medi-Cal, while minimizing any disruption in coverage.  This transition will create benefits for children, families, health plans, and providers by simplifying eligibility and coverage for children and families; improve coverage through retroactive benefits, increased access to vaccines, and expanded mental health coverage; and eliminate premiums for low-income beneficiaries.”

According to Dorn, the four long-range choices in the Urban Institute report are:

• Keep Healthy Families as it is structured now;
• Move all Healthy Families children into Medi-Cal and eliminate the Healthy Families program;
• Keep Healthy Families, but have the Health Benefit Exchange run it, instead of the Managed Risk Medical Insurance Board; and
• Arrange for Healthy Families-level benefits through commercial plans, negotiated by the exchange.

Moving Healthy Families into the exchange doesn’t thrill Dorn. “On balance, that might be harmful to children,” he said, “because the exchange will have lots on its plate, so children’s issues could get short shrift.”

But the idea of the exchange negotiating rates and benefits comparable to the current Healthy Families program has some real possibilities, Dorn said. “There could be significant gains from that approach, like broader access to providers,” he said. “It’s not clear, though, whether that approach is feasible.”

The uncertainty over access is the main reason to move more slowly, Dorn said.

Money matters to the state, though, and that was not a factor in the Urban Institute study. “Our focus is on what policy choices are the best for low-income children,” Dorn said. “Our recommendation is, in view of the many open questions, to take the conservative approach.”

Dorn expects the report will be released in two weeks. He will present the report’s findings at next week’s MRMIB meeting.