Massive ‘Disenrollment’ of Children Considered

The mood at the start of yesterday’s Managed Risk Medical Insurance Board meeting was somber.

The chair of MRMIB, Cliff Allenby, said a letter had recently arrived from the Department of Finance, saying that $130 million in state general fund money would need to be cut from the Healthy Families program, which is administered by MRMIB.

Since the federal government matches state money 2 to 1, that means a grand total of $390 million was suddenly gone from Healthy Families, a low-cost insurance program that covers about 870,000 children in California.

That’s a shortfall of about 37% of the entire budget, according to MRMIB officials. Allenby couldn’t quite fathom it.

“We have to discuss disenrollment,” Allenby said. “There’s no other choice.”

The number of children who might lose coverage is still to be determined, as is the time frame for making those moves, according to Janette Casillas, executive director of MRMIB.

“We have a fiduciary responsibility to make this happen, and really, the choices are minimal,” Casillas said. “I don’t know that they’re even choices. That’s why we have to figure it out soon, figure out when to do it — because the longer you wait, the more you have to disenroll.”

If MRMIB officials act relatively quickly to downsize the number of children in the program, she said, the savings would accumulate, and fewer children overall would have to be dropped.

But with a 37% budget shortfall, you’re looking at dropping a boatload of kids from the program.

The bulk of the shortfall comes from the sunsetting of a managed care tax. There are two measures in the Legislature from last session — ABX1 21 and SBX1 9 — that would extend that managed care tax, and that’s what Healthy Families officials hope could still happen.

“The Legislature is back in session [this week],” Casillas said, “and we’re hopeful that the Legislature will act on this item.”

Any changes to the program would have to be approved by the board, the Department of Finance and by federal officials, Casillas said. Allenby said that could be tricky.

“There are implications beyond us,” Allenby said, “if the feds say you’re not meeting your memorandum of understanding. But I don’t think we have a choice here. To meet that would basically mean elimination of the program. The question is, when we would have to do disenrollment.”

Independent of the managed care tax extension, the Healthy Families program faces a budget shortfall of about $23 million, Casillas said. When the federal 2-to-1 match is factored in, that means a cut of $69 million. If that were the cut, rather than the total of $390 million, Casillas said she is unsure whether that, by itself, might mean ending enrollment for some California children.

The current 30-day Legislative session does not give the state much time to act, Casillas said. “As you can imagine, with the size of the dollars at stake here, time is of the essence,” she said. “We are optimistic that the Legislature will convene now and take this issue up. We have a lot to lose in not covering children or disenrolling children, if that’s what this turns out to be.”

Casillas said her staff will analyze the best ways to go about making the changes and present an update at the next MRMIB meeting, on Sept. 14.