BILL ANALYSIS Ó
SB 36
Page 1
Date of Hearing: June 21, 2011
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
SB 36 (Simitian) - As Amended: March 29, 2011
SENATE VOTE : 26-13
SUBJECT : County Health Initiative Matching Fund.
SUMMARY : Expands eligibility for children to enroll in the
County Health Initiative Matching (CHIM) Fund Program which uses
local funds to match federal Children's Health Insurance Program
(CHIP) funds. Specifically, this bill :
1)Expands eligibility to the CHIM Fund to children in families
whose income is at or below 400% of the federal poverty level
(FPL), from 300% of FPL.
2)Authorizes eligibility for children who meet the requirements
for the Healthy Families Program (HFP) but are unable to
enroll as a result of restricted enrollment by the Managed
Risk Medical Insurance Board (MRMIB) due to budget
limitations.
3)Requires the entity that will be providing the local funds to
specify the income level for which the coverage will be
provided and whether individuals who meet the criteria for
HFP, but are unable to enroll due to restricted enrollment
will be covered.
4)Conditions implementation on obtaining federal approval.
EXISTING LAW :
1)Establishes HFP, administered by MRMIB, to provide low-cost
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% of the
FPL.
2)Authorizes the CHIM Fund, administered by MRMIB, to fund
children's health coverage using local funds as the state
match for children in families with income at or below 300% of
FPL and who don't qualify for HFP or no share of cost
SB 36
Page 2
Medi-Cal.
3)Establishes a sharing ratio for Medi-Cal at 50% federal, 50%
state, but under the American Reinvestment and Recovery Act
provides a temporary enhanced sharing ratio of 62% federal,
38% state retroactively from October 1, 2008 through December
31, 2010.
FISCAL EFFECT : According to the Senate Appropriations
Committee, the applicant counties pay a $17,000 application fee,
which covers the application process and the necessary
submission of the State Plan Amendment (SPA). Assuming that the
per member per month cost of a child enrolled in the County
Children's Health Initiative Program (C-CHIP) is approximately
$101 total funds and that a county that chooses to enroll
children with family incomes between 300 and 400% 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 choose to enroll children above 300%
FPL, then there would be no cost to this bill.
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% FPL will have the opportunity to
purchase subsidized insurance through the health insurance
exchange.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill is
intended to allow counties that participate in the CHIM Fund
to draw federal matching funds by providing health care
coverage to qualified children with family income at or below
400% of FPL. The author states that increasing the income
level from 300% of FPL allows these participating counties to
take full advantage of the increase in available federal
matching funds through the federal Children's Health Insurance
Program Reauthorization Act (CHIPRA) of 2009 (Public Law
111-3). This bill is also intended to allow counties to
provide health care coverage to children who would otherwise
have been eligible or covered by HFP through MRMIB but for
limitations on enrollment or eligibility restrictions that may
SB 36
Page 3
be imposed due to budget shortfalls.
2)BACKGROUND . C-CHIP and CHIM Fund were created by AB 495
(Diaz), Chapter 648, Statutes of 2001. The purpose was to
allow local entities, by means of intergovernmental transfer
of local funds, to draw down federal financial participation
(FFP) matching funds for low cost health coverage, with
benefits similar to HFP, to children through age 19 not
eligible for HFP or the no-cost Medi-Cal Program, and whose
household income falls within 251% and 300% FPL. Usually
federal funds require a State General Fund match. The C-CHIP
Program allows counties to use county funds as a match for
available federal funds which are allocated to California, but
for which there had been no state General Funds allocated.
There are currently three counties, San Francisco, San Mateo,
and Santa Clara that were approved to draw down FFP under an
SPA that was approved in 2004. According to MRMIB, these
counties use the funds to provide health insurance coverage to
uninsured children through the County Organized Health System
or Local Initiative. The MRMIB 2011 May Revision estimates
1,258 children enrolled in the current year at a cost of
$449,000 local funds and $449,000 federal funds. Similar
enrollment is expected in fiscal year (FY) 2011-12.
3)CHILDREN'S HEALTH INSURANCE PROGRAM . CHIP was enacted as part
of the Balanced Budget Act of 1997 and has allocated about $20
billion over 10 years to help states insure low-income
children who are ineligible for Medicaid but cannot afford
private insurance. HFP is California's version of the federal
CHIP and provides health, dental, and vision coverage to
children in families with incomes between 100% and 250% of the
FPL who are not eligible for Medi-Cal and do not have private
insurance. The sharing ratio in HFP is 65% federal, 35%
state. As of June 2011, there were 883,596 children enrolled.
In 2007, after President Bush and Congress could not agree on
CHIP reauthorization details, the program was extended through
March 2009. In February 2009, CHIPRA was approved by Congress
and signed by President Obama extending CHIP for four and a
half years. In concert with the signing, President Obama sent
a memorandum to the Centers for Medicare and Medicaid Services
requesting that they immediately withdraw an August 2007
Directive sent to state health officials which imposed
SB 36
Page 4
conditions on states and limited their options to provide
coverage to uninsured children. He requested that they
implement CHIP from this time forward without these
requirements. Among other provisions, this clarified that
only children with family incomes up to 300% of FPL will be
eligible for the enhanced CHIP match, but states are not
limited from increasing eligibility above that level and
drawing down the match at the state's Medicaid rate.
Each state is allocated a specific amount of federal CHIP funds.
In federal FY 2010, California's allotment was $1.63 billion.
The state used $1.19 billion leaving approximately $440
million in unused funds. Future allotments are expected to be
the similar. If a state does not use its entire allotment,
the funds revert to other state CHIPs around the country.
The Patient Protection and Affordable Care Act (Public Laws
111-148) (PPACA) extends the authorization of federal CHIP for
an additional two years, through September 30, 2015. PPACA
requires states to maintain current income eligibility levels
for CHIP through September 30, 2019. States are prohibited
from implementing eligibility standards, methodologies or
procedures that are more restrictive than those in place as of
March 23, 2010, with the exception of waiting lists for
enrolling children. California would put over $25 billion
Medicaid and CHIP federal matching funds annually in jeopardy
if it were to not fulfill this Maintenance of Effort (MOE)
requirement. Thus, it is unlikely that counties would need to
use the authority in this bill to enroll children that are
eligible for HFP, 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.
In 2009, HFP had a $194 million General Fund shortfall resulting
from budget-related cutbacks and was closed to all new
enrollments. In August of 2009, there were 70,788 children on
the HFP waiting list. Additionally, MRMIB projected that over
600,000 children would need to be disenrolled. A three-part
funding solution was devised. The California Children and
Families Commission voted to grant $81 million to MRMIB to
cover children age zero to five; $157 million in gross
premiums taxes on Medi-Cal managed care plans was enacted
which yields $97 million in additional federal funds for HFP;
and, savings from program changes to HFP, including increased
SB 36
Page 5
family premiums and other program changes being adopted by
MRMIB.
The Governor's May Revision proposed to shift all HFP eligible
children to the Medi-Cal Program over a six-month transition
period beginning January 1, 2012.
4)PRIOR LEGISLATION.
a) SB 1431 (Simitian) of 2010, a nearly identical bill 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."
b) AB 1130 (Diaz), Chapter 687, Statutes of 2003, renames
the Children's Health Initiative Matching Fund to be the
CHIM Fund and is the implementing legislation for AB 495.
c) AB 1524 (Richman), Chapter 866, Statutes of 2003,
expands the scope of the CHIM Fund to include health
insurance coverage for adults.
d) AB 495 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.
5)SUPPORT . According to the sponsor, San Mateo County, this
bill would align and conform current state law to allow
counties to take full advantage of the eligibility expansion
extended under federal funding should the state once gain
limit enrollment in HFP. The California CHIMs write in
support that this bill would allow communities to draw down
federal finding made available through CHIP which is not
currently claimed. The City and County of San Francisco, in
support states that in the even the Governor's budget and
"trigger" cuts to HFP are implemented and the City decides to
backfill those cuts, this bill would endure $2.74 million to
$15.47 million to San Francisco in federal matching funds.
REGISTERED SUPPORT / OPPOSITION:
Support
SB 36
Page 6
County of San Mateo (sponsor)
American Academy of Pediatrics
California Association of Health Insuring Organizations
California Chapter of the American College of Emergency
Physicians
California Children's Health Initiatives
California Children's Hospital Association
California Chiropractic Association
California Communities United Institute
California Medical Association
California Optometric Association
California Psychiatric Association
California School Employees Association
California State Association of Counties
California State PTA
City and County of San Francisco
County of Alameda
Health Improvement Partnership of Santa Cruz County
Junior Leagues of California
Local Health Plans of California
Lucille Packard Children's Hospital
Peninsula Interfaith Action
Santa Clara County
Urban Counties Caucus
Opposition
None on file.
Analysis Prepared by: Marjorie Swartz / HEALTH / (916)
319-2097