BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 36 (Simitian)
Hearing Date: 5/26/2011 Amended: 3/29/2011
Consultant: Katie Johnson Policy Vote: Health 6-2
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BILL SUMMARY: SB 36 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.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Health care for newly $91 - $121 $182- $242$182-
$242 Federal
eligible C-CHIP children $91 - $121 $182- $242$182-
$242 Local
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STAFF COMMENTS: 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. In the MRMIB 2010 November Estimate, San Mateo County
is estimated to have 399 children enrolled in their program by
June 30, 2011, at a cost of $130,000 local funds and $240,000
federal funds. Similar enrollment is expected in FY 2011-12.
This bill would permit the C-CHIP programs, through MRMIB, to
match local funds with federal funds for services provided to
children with family incomes between 300 and 400 percent FPL.
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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). Applicant counties pay a $17,000
application fee, which covers the application process and the
necessary submission of the SPA.
San Mateo County is the sponsor of this bill and would be the
county most likely to apply for authorization for this
expansion. They are the only county that covers children above
300 percent FPL.
Assuming that the per member per month cost of a child enrolled
in a C-CHIP is approximately $101 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 $181,800 - $242,400 federal funds and $181,800 -
$242,400 in local funds each year. If more counties chose to do
this, the costs would be higher. If no counties chose to enroll
children between 300 and 400 percent FPL, then there would be no
cost to this bill.
All costs related to benefits and MRMIB administration would be
shared at the Medicaid program federal medical assistance
percentage (FMAP) matching rate of 50 percent federal funds and
50 percent non-federal funds. Federal law, the Children's Health
Insurance Program Reauthorization Act of 2009 (CHIPRA), requires
that states and counties choosing to expand eligibility to
individuals with incomes above 300 percent FPL, be paid at the
Medicaid matching rate, not the enhanced CHIP rate-CHIP programs
like Healthy Families are paid with 65 percent federal funds and
35 percent non-federal funds-and that 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 $1.63 billion for
Federal FY 2010. Of those funds, the state used $1.19 billion
over the course of FFY 2010. This means that there are
approximately $440 million in unused federal funds that the
counties could match for FFY 2010. FFY 2010 includes the final 3
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quarters of California's FY 2009-2010 and the first quarter of
FY 2010-2011. The FFY 2011 allotment is expected to be
approximately $1.25 billion. If California's actual FFY 2011
expenditures were to be the same as those in FFY 2010, there
would be $68 million in room under the cap that could be used
for this program. If San Mateo were to draw down federal funds
for children between 300 and 400 percent FPL, pursuant to this
bill, the high end estimated federal fund expenditures for the
C-CHIP program in FY 2011-12 would be $1.08 million in total.
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. There
could be decreased enrollment in the program because 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. Healthy Families sustained
significant budget cuts in the FY 2009-2010 budget. With a
donation of $81 million from the California Children and
Families Commission and $97 million in 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 procedures that are
more restrictive than those in effect as of the date of
enactment, which would include a waiting list. California would
put over $25 billion Medicaid and CHIP federal matching funds
annually 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.
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This bill is nearly identical to SB 1431 (Simitian) of 2010,
which was vetoed by the Governor. In his veto message, the
Governor wrote, "the practical impacts of this bill will be
short-lived, given that families with eligible children will
have the opportunity to purchase subsidized insurance through
the health insurance exchange in 2014."