BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1431 (Simitian)
Hearing Date: 5/3/2010 Amended: 4/7/2010
Consultant: Katie Johnson Policy Vote: Health 7-2
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BILL SUMMARY: SB 1431 would permit the expansion of eligibility
for the County Health Initiative Matching Fund program to
children with family incomes between 300 and 400 percent of the
federal poverty level, in accordance with recent federal law.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Health care for newly $68 - $90 $135 -
$180 $135 - $180 Federal
eligible C-CHIP children $68 - $90 $135 -
$180 $135 - $180 Local
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
The 29 counties that operate Children's Health Initiatives
(CHIs) utilize local funds to provide health insurance to
children who are not eligible for other state health insurance
programs such as Medi-Cal, the state's Medicaid program, and the
Healthy Families Program (Healthy Families), the state's
Children's Health Insurance Program (CHIP), and to children with
family incomes up to 300 percent of the federal poverty level
(FPL).
Three of the counties-San Francisco, San Mateo, and Santa Clara
Counties-participate in the County Children's Health Insurance
Program (C-CHIP). They send their local funds through
intergovernmental transfers (IGTs) for deposit in the County
Health Initiative Matching Fund at the state Managed Risk
Medical Insurance Board (MRMIB). MRMIB, the state board that
administers Healthy Families, takes the IGTs and matches them
with federal CHIP funds and sends them back to the three C-CHIP
programs.
This bill would permit the C-CHIP programs to match local funds
with federal funds for services provided to children with family
incomes between 300 and 400 percent of the federal poverty
level. MRMIB's state administration costs to administer C-CHIP
would be paid from local and federal funds. This bill conditions
the expanded eligibility on MRMIB obtaining necessary federal
approvals, which includes the submission and approval of a state
plan amendment (SPA). San Mateo County is the sponsor of this
bill and would be the county most likely to apply for
authorization for this expansion. It appears likely that at
least one county and probably no more than 5 would apply for
these federal funds.
The applicant counties pay a $17,000 application fee, which
covers the application process and the necessary submission of
the SPA.
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SB 1431 (Simitian)
Assuming that the per member per month cost of a child enrolled
in a C-CHIP is approximately $75 total funds and that a county
that chooses to enroll children with family incomes between 300
and 400 percent FPL, as permitted by this bill, would enroll
between 300 and 400 children annually, the costs would be
approximately $135,000 - $180,000 federal funds and $135,000 -
$180,000 local funds each year. If more counties choose to do
this, the costs would be higher. If no counties choose to enroll
children above 300 percent FPL, then there would be no cost to
this bill.
If a county chose to expand eligibility to children with family
incomes 300 - 400 percent FPL, pursuant to this bill, all
administrative and benefit costs would be paid from local and
federal funds at the Medicaid program federal medical assistance
percentage (FMAP) matching rate of 50 percent federal funds and
50 percent state funds, unless one of the several enhanced FMAP
extensions are passed by Congress. Medicaid programs around the
country currently receive an enhanced FMAP rate for October 1,
2008, to December 31, 2010. California's rate is 61.59 percent
federal funds and 38.41 percent non-federal funds. Although
federal law, the Children's Health Insurance Program
Reauthorization Act of 2009 (CHIPRA), requires the Medicaid
matching rate for C-CHIPs that want to expand eligibility to the
300 - 400 percent FPL population, the federal matching funds
come from a state's annual CHIP allotment, and not from Medicaid
funds.
Each state is allotted a specific amount of federal CHIP funds.
The costs associated with this bill would put pressure on
California's allotted funds, which were $1.55 billion for
Federal FY 2009. Of those funds, the state used $1.14 billion
over the course of FFY 2009. This means that there are
approximately $400 million in unused federal funds that the
counties could match for FFY 2009. FFY 2009 includes the final 3
quarters of California's FY 2008-2009 and the first quarter of
FY 2009-2010. Future federal allotments are expected to be of
similar amounts. Further, MRMIB may request additional federal
funds when necessary in accordance with CHIPRA. If the state
does not use its entire federal allotment, the funds revert to
other CHIPs around the country based on a specified formula.
Costs associated with this bill would be unknown beyond January
1, 2014, when federal health reform becomes effective. Families
with incomes at or under 400 percent FPL will have the
opportunity to purchase subsidized insurance through the health
insurance exchange.
This bill would also permit C-CHIPs to enroll children eligible
for Healthy Families, but who are unable to obtain coverage
through the program due to enrollment policies initiated by
MRMIB because of insufficient funds. The Healthy Families
program sustained significant budget cuts in the FY 2009-2010
budget. With a donation of $81 million from the California
Children and Families Commission and revenues from a tax
on Medi-Cal managed care plans, MRMIB was able to avoid
disenrolling an estimated 650,000 children.
The enactment of federal health care reform included maintenance
of effort (MOE) requirements that prohibit states from
instituting standards, methodologies, or
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procedures that are more restrictive than those in effect as of
the date of enactment. A state would put Medicaid and CHIP
federal matching funds in jeopardy if it were to not fulfill the
MOE. Thus, it is unlikely that counties would need to use the
authority in the bill to enroll children that are eligible for
Healthy Families, but who are unable to obtain coverage due to a
budget deficit-related administrative action by MRMIB that
limits eligibility because such an action would violate the MOE.