Rolling Back Children’s Health Coverage?

California and the federal government appear to be headed in strikingly different directions when it comes to health coverage. President Obama and Congress are gearing up to increase access to health care. In contrast, Governor Schwarzenegger proposes substantial cuts to health programs to help close the state’s re-emerging budget gap.

Take, for example, the Healthy Families Program, which provides health coverage to more than 900,000 California children whose family incomes are too high to qualify for Medi-Cal and who do not have access to job-based health insurance. The current income limit for Healthy Families is 250 percent of the poverty line ($45,775 for a family of three). The Governor proposes to reduce the limit to 200 percent of the poverty line ($36,620 per year for a family of three). This change would save the state $54.5 million in 2009-10 by dropping 225,000 kids from the program. Notably, this cut is one of the Governor’s “contiFngency” proposals that he would ask the Legislature to adopt if voters reject Propositions 1C, 1D, and 1E tomorrow.

The Governor’s proposal comes as the federal government is ramping up funding to help states cover more uninsured children. The Children’s Health Insurance Program Reauthorization Act (CHIPRA), signed by President Obama in February, substantially increases federal funding for children’s health coverage, giving California policymakers an opportunity to cover more uninsured children, contingent on the state providing its own matching dollars (California pays one-third, and the federal government two-thirds, of Healthy Families Program costs). The Legislative Analyst’s Office, for example, reports that California could expand eligibility for Healthy Families to 300 percent of the poverty line ($54,930 per year for a family of three) – the exact opposite of the Governor’s proposal – for a net state cost of less than $1 million per year.

— Scott Graves