BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: SB 1431
S
AUTHOR: Simitian
B
AMENDED: April 7, 2010
HEARING DATE: April 14, 2010
1
CONSULTANT:
4
Dunstan/jl
3 1
SUBJECT
County Health Initiative Matching Fund
SUMMARY
Expands eligibility for children enrolling in the County
Health Initiative Matching Fund program which uses local
funds to match federal Children's Health Insurance Program
funds.
CHANGES TO EXISTING LAW
Existing federal law:
Establishes the Children's Health Insurance Program (CHIP)
which provides federal matching funds for state health
insurance programs. Provides that the federal share of
these state programs generally shall be 65 percent and the
state share 35 percent. Provides specific guidance for
determining eligibility for CHIP while preserving
flexibility for states to administer these programs
according to the needs of the state.
Existing state law:
Establishes the Healthy Families program to provide
affordable insurance, including health, dental and vision
coverage, to children who do not have health insurance, do
not qualify for free Medi-Cal and are in families at or
below 250 percent of the federal poverty level (FPL).
Provides that Managed Risk Medical Insurance Board (MRMIB)
Continued---
STAFF ANALYSIS OF SENATE BILL 1431 (Simitian)Page 2
administers Healthy Families.
Authorizes the County Health Initiative Matching Fund,
administered by MRMIB, to fund children's health coverage
using local funds as the state match to draw down federal
CHIP dollars. Requires MRMIB, in consultation with the
Department of Health Care Services, to administer the fund
for the express purpose of allowing local funds to be used
to match federal funds. Authorizes MRMIB to expend moneys
from the fund for state administrative purposes.
Limits eligibility for receiving funds to counties and
county-created entities. Requires that only specific
sources of local funds are eligible for the program.
Specifies the process for counties to apply and receive
funding under the program and the criteria that MRMIB shall
use to evaluate proposals. Limits eligibility within the
federally funded coverage programs to children in families
whose income is at or below 300 percent of the FPL or
adults whose family income is at or below 200 percent of
the FPL. Further restricts eligibility to those who do not
qualify for Healthy Families or Medi-Cal without a share of
cost.
Requires that funds from the Children's Health Initiative
Matching Fund only be matched with CHIP funds that are not
needed for Healthy Families and would otherwise revert to
the federal government. Provides that the state shall be
held harmless from any disallowances and provides that any
applicant shall be liable for such federal disallowances.
This bill:
Increases the eligibility for the County Health Initiative
Matching Fund to children in families whose income is at or
below 400 percent of the federal poverty level (FPL).
Provides that a child is eligible even if they meet the
requirements for Healthy Families but is unable to enroll
when MRMIB has restricted entry into the program because of
insufficient funds.
FISCAL IMPACT
This bill has not been analyzed by a fiscal committee.
BACKGROUND AND DISCUSSION
STAFF ANALYSIS OF SENATE BILL 1431 (Simitian)Page 3
According to the author, SB 1431 would allow counties who
participate in the County Health Initiative Matching Fund
program (CHIM) to provide health care coverage to qualified
low-income children who are unable to enroll in the Healthy
Families Program or whose family income is at or below 400
percent of the federal poverty level. The author states
the bill addresses the possibility of the current budget
shortfall, and would allow participating counties to
provide health care to children who may qualify for Healthy
Families but, due to budget constraints, are not provided
care.
Second, when the enabling legislation (AB 495, Diaz,
Chapter 648, Statutes of 2001) was signed into law, the
federal government provided matching funds for low-income
individuals who were at or below 300 percent of the FPL. In
2009, however, the federal government increased its
matching dollars to include those who were at or below 400
percent of the FPL. SB 1431 amends CHIM so that
participating counties can take full advantage of the
expanded eligibility.
Background
CHIP was created as part of the federal Balanced Budget Act
of 1997. Under CHIP, the federal government uses a formula
to determine how much money each state will be allocated,
the money is then used to provide the federal match to
state funds. California's program is called Healthy
Families. California currently receives 65 percent of its
Healthy Families program expenses from the federal match;
the state contributes the other 35 percent. As of February
2010, approximately 875,000 children were enrolled in
Healthy Families.
One of President Obama's first acts was to sign the
Children's Health Insurance Program Reauthorization Act,
(CHIPRA), which reauthorized the federal CHIP program. The
reauthorization legislation increased California's
allotment almost two-fold. The state's allotment had been
expected to be $800 million for the last federal fiscal
year, but with the new legislation, was approximately $1.5
billion. Another of the many significant changes in CHIPRA
was to change the allowable eligibility limit from 300 to
400 percent of the FPL, at the discretion of the states.
Under federal law, these allotments are allocated to states
STAFF ANALYSIS OF SENATE BILL 1431 (Simitian)Page 4
based on a formula, and states must provide matching funds
in order to receive the federal funds. California
currently receives 65 percent of its Healthy Families
program expenses from the federal match; the state
contributes the other 35 percent. Each state's annual
allotment (expenditure maximum) may be spent over several
federal fiscal years. Any funds not spent within three
federal fiscal years revert and are redistributed to other
states or ultimately returned to the federal treasury.
Prior to CHIPRA, California lost about $1.5 billion in
reversions to other states.
Healthy Families has faced budgetary challenges in the last
year. Significant reductions were made to the program as
part of the enacted 2009-2010 state budget. As a result,
MRMIB projected that 650,000 children would need to be
disenrolled, however this did not occur. The California
Children and Families Commission voted to grant MRMIB $81
million, which would allow coverage for children age zero
to five to be maintained. A tax on Medi-Cal managed care
plans was enacted which provided considerable additional
funding for the program. Additionally, MRMIB approved a
number of Healthy Families program benefit changes at its
August 2009 meeting, including changes to the co-payment
structure.
Local children's coverage programs
These programs are known as Local Children's Health
Initiatives (CHI) and operate in 29 counties across
California. Collectively, the CHIs have insured more than
88,000 previously uninsured children through the locally
funded efforts that the CHIs term the Healthy Kids program.
MRMIB gained federal approval for three of these programs
to draw down federal funds to support their local
children's coverage programs. The participating counties
of San Mateo, San Francisco, and Santa Clara have all drawn
down federal funds to support their local children's
coverage programs.
The small number of participating counties reflects several
factors. A county must have a sufficient number of
children that are eligible for the program and federal
matching funds to make an application worthwhile.
Secondly, prior to CHIPRA, the state was beginning to reach
a point where there were inadequate federal funds for
Healthy Families and local programs. The third factor is
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that MRMIB must have the resources to process these
applications and requests for federal approval; budget cuts
and furloughs have made this more difficult.
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Prior legislation
AB 1130 (Diaz) Chapter 687, Statutes of 2003, renames the
Children's Health Initiative Matching Fund to be the County
Health Initiative Matching Fund and is the implementing
legislation for AB 495.
AB 1524 (Richman) Chapter 866 Statutes of 2003 expands the
scope of the County Health Initiative Matching Fund to
include health insurance coverage for adults.
AB 495 (Diaz), Chapter 648, Statutes of 2001, establishes
the Children's Health Initiative Matching Fund to allow
local funds from counties with children's health
initiatives to draw down federal dollars from California's
CHIP allotment.
Arguments in support
Supporters argue that this bill is important because it
will allow counties that are able to raise the eligibility
level for the children's health initiative programs to
allow these programs to draw down federal funding for
children's health care. Supporters also point out that it
conforms state law with newly enacted federal law (CHIPRA).
They also note that if the state ever did limit funding
for Healthy Families it would allow local programs to draw
down federal funding and continue covering children.
COMMENTS
1. Federal health care reform placed a maintenance of
effort requirement on the state. Federal health care
reform provides that states cannot have eligibility
standards, methodologies or procedures in place that are
more restrictive than those in effect as of the date of
enactment of health care reform in order to continue to
receive Medicaid funds, the federal program that provides
matching funds for Medi-Cal. For California, this
represents approximately $20 billion. Any effort to limit
enrollment in Healthy Families, by establishing a waiting
list or reducing eligibility would put the state's share of
Medicaid funds at risk. As such, the provisions of the
bill that open up the county programs to children that are
eligible for Healthy Families, but unable to enroll, is now
less likely to be used than when the bill was introduced.
The provisions raising the income eligibility for children
in a family with income at or below 400 percent of the FPL
STAFF ANALYSIS OF SENATE BILL 1431 (Simitian)Page 7
is needed to conform with recently enacted federal law.
POSITIONS
Support: County of San Mateo (sponsor)
American College of Emergency Physicians
(CAL/ACEP)
California State Association of Counties
City and County of San Francisco
County of Santa Clara
Oppose: None received
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