BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 422
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          Date of Hearing:  May 7, 2013

                            ASSEMBLY COMMITTEE ON HEALTH
                                 Richard Pan, Chair
                AB 422 (Nazarian) - As Introduced:  February 15, 2013
           
          SUBJECT  :  Health care applications. 

           SUMMARY  :  Adds information regarding health care coverage  
          available through the California Health Benefit Exchange  
          (Exchange), to notifications on applications for the School  
          Lunch Program, effective January 1, 2014.  Information from the  
          application may also be used to determine eligibility for the  
          Healthy Families Program (HFP), county or local-sponsored  
          programs, as defined and as applicable, if the parent has  
          granted consent when a child does not meet eligibility  
          requirements for Medi-Cal.  

           EXISTING LAW  :  

          1)Establishes the Medi-Cal program, administered by the  
            Department of Health Care Services (DHCS), which provides  
            comprehensive health benefits to low-income children, their  
            parents or caretaker relatives, pregnant women, elderly, blind  
            or disabled persons, nursing home residents, and refugees who  
            meet specified eligibility criteria.

          2)Requires the Department of Education to administer the  
            National School Lunch program, which provides free meals to  
            children with family incomes at or below 130% of the federal  
            poverty level (FPL) and reduced price meals to children with  
            family incomes at or below 185% of FPL.

          3)Establishes the Children's Health Insurance Program (CHIP)  
            that provides health coverage to children in families that are  
            low income, but with incomes too high to qualify for Medicaid.  
            After January 1, 2013, begins a transition of California's  
            CHIP from the HFP, administered by the Managed Risk Medical  
            Insurance Board (MRMIB) to Medi-Cal. 

          4)Permits information from an application for the School Lunch  
            Program to be used to determine eligibility for HFP and any  
            other county- or local-sponsored programs, as defined and as  
            applicable, if the parent has granted consent when a child  
            does not meet eligibility requirements for Medi-Cal.








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          5)Requires, effective January 1, 2014, under the federal Patient  
            Protection and Affordable Care Act (ACA), an individual to  
            have the option to apply for state subsidy programs, which  
            include the state Medicaid program, the state's CHIP,  
            enrollment in a qualified health plan (QHP) through a state  
            exchange, and a Basic Health Plan (BHP), if there is one,  
            either in person, mail, online, telephone, or other commonly  
            available electronic means. 

          6)Under the ACA, effective in 2014, requires individuals to  
            maintain health insurance or pay a penalty, with exceptions  
            for financial hardship (if health insurance premiums exceed 8%  
            of a household's adjusted gross income), religion,  
            incarceration, and immigration status.

          7)Creates the Exchange, known as Covered California, as an  
            independent state entity governed by a five-member board, to  
            be a marketplace for Californians to purchase affordable,  
            quality health care coverage, for those qualified to claim  
            advance payment of premium tax credits and obtain cost-sharing  
            subsidies and as a way to meet the personal responsibility  
            requirements of the ACA.  

          8)Under the ACA, effective January 1, 2014, requires development  
            of a single, accessible standardized application for the  
            Exchange subsidies, the state Medicaid program, and the CHIP  
            program to be used by all eligibility entities and establishes  
            a process for developing and testing the application

          9)Under the ACA, effective January 1, 2014, requires states to  
            expand and simplify Medicaid eligibility (Medi-Cal in  
            California) by expanding coverage to former foster youth up to  
            age 26, eliminating the asset test for families, children, and  
            non-disabled persons under age 65, establishing a new  
            methodology for counting income in Medi-Cal, known Modified  
            Adjusted Gross Income (MAGI).

           FISCAL EFFECT  :  None

           COMMENTS  :

           1)PURPOSE OF THIS BILL  .  According to the author, current law  
            authorizes school districts to provide families with  
            notifications about the availability of school lunch programs.  








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             These notifications also inform parents about the  
            availability of low-cost health care coverage for children.   
            The ACA offers individuals and families with additional health  
            care coverage options, including expanded Medi-Cal coverage  
            and tax subsidies through the Exchange.  The author states  
            that this bill will update current information provided to  
            parents about the availability of low-cost health care  
            coverage to include information about the new Exchange.  The  
            author points out that multiple health problems may occur in  
            the absence of health insurance, consequently affecting a  
            child's ability to learn and parents' ability to work.  In  
            addition, children who have access to medical, dental, and  
            vision care often experience a greater sense of well-being.   
            According to the Los Angeles Unified School District (LAUSD),  
            this translates into improved school attendance and higher  
            academic achievement. 

          The author cites the California Simulation of Insurance Markets  
            (CalSIM) Study, conducted by the UCLA Center for Health Policy  
            Research and the UC Berkeley Labor Center, which estimates  
            that 1.42 million adults will be eligible for coverage under  
            the new Medi-Cal expansion.  An additional 2.6 million adults  
            will be eligible for tax credits to purchase health insurance  
            through California's new insurance marketplace, Covered  
            California.  Although children and families may be eligible  
            for these new coverage options, many parents are unaware of  
            health coverage options.  The CalSIM model includes two  
            scenarios to estimate take-up rates in Medi-Cal and Covered  
            California, a base model which assumes current individual and  
            market behaviors, and an enhanced model which assumes  
            additional outreach, enrollment, and simplification measures  
            are in place.  For example, under the base scenario 900,000  
            adults under 65 are predicted to enroll into Medi-Cal whereas  
            under the enhanced scenario with a more aggressive enrollment  
            and outreach strategy enrollment would reach 1.4 million by  
            2014.  The author argues that by updating information about  
            these new coverage options parents would be better informed in  
            order to take advantage of the health care coverage.  

           2)BACKGROUND  .  AB 59 (Cedillo), Chapter 894, Statutes of 2001,  
            established a statewide pilot project to expedite enrollment  
            into Medi-Cal for children receiving free lunches through the  
            National School Lunch Program, referred to as "EE."  Five  
            school districts implemented EE in 73 schools for the 2003-04  
            school year.  The current EE process is structured to expedite  








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            Medi-Cal enrollment for children who qualify for free school  
            lunches.  Under the program, if a child is determined  
            ineligible for Medi-Cal due to income but is potentially  
            eligible for HFP the county sends an HFP application to the  
            child's parents, who must complete the application process for  
            that program separately.  The school's EE coordinator reviews  
            School Lunch Program applications and determines whether a  
            child appears eligible for Medi-Cal.  If a child is determined  
            to be eligible for EE, the application is forwarded to the  
            county for final determination when there is written consent  
            from the parents.  The child is deemed temporarily eligible  
            for full-scope, no-cost Medi-Cal and the county has five  
            working days to send the family a card for temporary  
            enrollment.  The county then sends a follow-up form asking the  
            parent for additional information required for a full  
            application review.  If the child is subsequently determined  
            ineligible for Medi-Cal, the temporary enrollment is  
            terminated and the county sends the parents an application for  
            the HFP.  

          SB 1196 ( Cedillo), Chapter 729, Statutes of 2004, revised the  
            process to permit the information from the School Lunch  
            Program to also be used to actually determine eligibility for  
            HFP and any other county- or local-sponsored programs, if the  
            parent has granted consent.  SB 1196 also requires a county to  
            forward a School Lunch Program application and any specified  
            supplemental forms to the HFP or a county or local-sponsored  
            health insurance program, if an applicant is determined to be  
            ineligible for the full-scope, no-cost Medi-Cal.  When a child  
            is not eligible for full-scope, no-cost Medi-Cal, SB 1196  
            further requires the county to notify the parent or guardian  
            that their child is ineligible for Medi-Cal and that the  
            application has been forwarded to the HFP or a county- or  
            local-sponsored health insurance program.  An example of how  
            this has been implemented is the LAUSD Parent Handbook that  
            includes information about student health insurance, entitled  
            the LAUSD Children's Health Access and Medi-Cal Program  
            (CHAMP), and informs parents that it can assist them with  
            enrolling their children into no-fee or low-cost health  
            insurance programs, provides a toll-free CHAMP HELPLINE for  
            enrollment assistance, a Website, and other referrals to  
            information.  

           3)ACA  .  The ACA increases access to health insurance beginning  
            in 2014 through a coordinated system of "insurance  








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            affordability programs," including Medicaid, CHIP, subsidies  
            through advanced payment of premium tax credits for coverage  
            provided through new Exchanges, and optional state-established  
            BHPs.  The ACA, implementing guidelines, and proposed rules  
            issued by the Centers for Medicare and Medicaid Services (CMS)  
            to date, advance the federal vision of a simplified,  
            integrated enrollment system for all insurance affordability  
            programs.  It is based on a system that is technology-driven  
            and relies on electronic data matching to the greatest extent  
            possible.  The rules effectuate the ACA's transformative  
            change to Medicaid eligibility rules, enrollment, and renewal  
            processes, which will have significant impacts on applicants,  
            enrollees, and state Medicaid agencies.  This is equally true  
            on the Exchange side.  

              a)   Covered California  .  The California Exchange was  
               established in 2010 by AB 1602 (John A. Pérez), Chapter  
               655, Statutes of 2010, and SB 900 (Alquist), Chapter 659,  
               Statutes of 2010.  Through the Exchange, now called Covered  
               California, people with incomes between the Medi-Cal  
               threshold and up to 400% FPL are eligible for subsidies and  
               cost-sharing reductions.  Exchanges will not be insurers  
               but will provide eligible individuals and small businesses  
               with access to QHPs in a comparable way.  

              b)   The California Healthcare Eligibility, Enrollment and  
               Retention System (CalHEERS)  . CalHEERS is a procurement  
               conducted jointly by the Exchange, DHCS, and MRMIB to build  
               the Information Technology (IT) system to support the  
               consumer application and enrollment process at the  
               Exchange.  The portal will offer eligibility determinations  
               for both Medi-Cal and federally subsidized Covered  
               California coverage through the Exchange.  It will allow  
               enrollment through multiple access points including mail,  
               phone, and in-person applications.  It is guided by a "no  
               wrong door" policy that is intended to ensure the maximum  
               number of Californians obtain coverage appropriate to their  
               needs.  Enrollment will begin by October 2013, effective  
               January 1, 2014.  The CalHEERS business functions include  
               interfacing with the Medi-Cal eligibility data system.  

             Covered California is in the process of establishing an  
               Assister's Program that will include assister enrollment  
               entities (AEEs) and individual entities.  AEEs are entities  
               and organizations eligible to be trained and registered to  








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               provide in-person assistance to consumers to help them  
               apply for Covered California programs, particularly  
               entities that have access to Covered California's targeted  
               population.  Individual assisters are individuals who are  
               employed, trained, certified, and linked to AEEs to provide  
               in-person assistance to consumers and help them apply for  
               Covered California programs and are individuals who can  
               provide assistance in a culturally and linguistically  
               appropriate manner to consumers.  According to a recent  
               stakeholder webinar conducted by Covered California on the  
               assisters program (March 14, 2013 Stakeholder Webinar), the  
               proposed compensation for AEEs is $58 per new enrollment  
               into Covered California, including a person who was a  
               MAGI-eligible Medi-Cal enrollee but upon redetermination  
               qualifies for Covered California and when a currently  
               enrolled person adds a new dependent.  Compensation for  
               annual renewal is $25.  The funding source for the initial  
               application is the federal funding from the Level II  
               Establishment Federal Grant and renewals will be funded as  
               operating costs from self-sustainability funds.  A list of  
               eligible entities will be established and Covered  
               California is looking to all opportunities to build a  
               robust network of In-Person Assisters, particularly those  
               who have prior experience with healthcare and providing  
               application assistance.  School districts are listed among  
               the recommended proposed entities. 

              c)   Public Awareness.   An April 2013 Health Tracking Poll  
               from the Kaiser Family Foundation (KFF), found that much of  
               the public remains confused about the ACA.  Four in 10  
               Americans (42% were unaware that the ACA is still the law  
               of the land, including 12% who believe the law has been  
               repealed by Congress, 7% who believe it has been overturned  
               by the Supreme Court and 23% who don't know whether or not  
               the ACA remains law.  The poll further found that about  
               half of the public said they do not enough information  
               about the health reform law to understand how it will  
               impact their own family, share that rises among the  
               uninsured and low-income households.  Covered California  
               has a budget of about $290 million to reach 5.3 million  
               Californians.  Slightly less than half the money is going  
               into television ads and other traditional media buys.  Most  
               of the remaining funds are going into social media, data  
               mining and on-the ground outreach.  









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           4)HFP  .  The federal CHIP provides health coverage to children in  
            families that are low-income, but with incomes too high to  
            qualify for Medicaid.  Until January 1, 2013, California's  
            CHIP was the HFP, administered by the MRMIB and provided  
            health insurance for about 863,000 children up to age 19, in  
            families with incomes above the thresholds needed to qualify  
            for Medi-Cal but below 250% of the FPL.  (The FPL for 2013 is  
            $23,550 in annual income for a family of four).  Under CHIP,  
            states have the option to create a stand-alone program such as  
            HFP or expand its Medicaid program to include these children  
            in families with higher income.  In both options, the federal  
            matching ratio is 65% federal funds to 35% State Funds.  As  
            originally implemented in California, Medi-Cal was expanded to  
            cover infants under age one in families with income under 200%  
            of FPL, children aged one to five in families with income up  
            to 133% FPL, and children age six to 18 in families with  
            income up to 100% FPL.  A child of any age in a family with  
            income over the threshold but up to 250% FPL was covered by  
            HFP.

          As part of the eligibility simplification, the ACA, effective  
            calendar year 2014, replaces many of the complex categorical  
            groupings and limitations in the Medicaid program.  The ACA  
            requires, by January 1, 2014, the state's Medicaid program to  
            cover all children in families with income up to 133% FPL,  
            thereby eliminating discontinuity based on the age of the  
            child.  In effect, this required California to transition  
            children in families with income between 100% FPL and 133% FPL  
            between age six and 19 to Medi-Cal from HFP by 2014.  The ACA  
            also gives the states authority to integrate CHIP into the  
            exchanges or retain as a stand-alone program.  

          The Legislature adopted a modified version of this proposed  
            transition.  AB 1494 (Committee on Budget), Chapter 28,  
            Statutes of 2012, enacted a transition of approximately  
            860,000 HFP subscribers to the Medi-Cal Program beginning no  
            sooner than January 1, 2013, in four Phases throughout 2013.   
            Children in HFP will transition into Medi-Cal's new optional  
            Targeted Low Income Children's Program covering children whose  
            family income is up to and including 250% of FPL.  Phase 1  
            began January 1, 2013, and is continuing through May 1, 2013  
            and includes approximately 100,000 children.  Phase 2 began  
            April 1, 2013, and includes approximately 240,000 children.   
            Phase 3 is scheduled to begin August 1, 2013, and will  
            transition approximately 111,000 children and Phase 4 is  








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            scheduled for September 2013 and covers approximately 38,000  
            children.  Each phase is dependent on federal approval which  
            has been received for Phases 1 and 2 only.  

           5)Auto-Enrollment  .  The genesis of the Cedillo bills (AB 59 and  
            SB 1196) was: a) the relatively high numbers of success of  
            auto-enrollment strategies with other public and private  
            programs; and, b) the high numbers of children that remained  
            eligible but unenrolled in CHIP/HFP.  According to a  
            Commonwealth Fund, June 2006 report, "Automatically Enrolling  
            Eligible Children and Families into Medicaid and SCHIP:  
            Opportunities, Obstacles, and Options for Federal  
            Policymakers," 62% of uninsured children and two-thirds of  
            uninsured low-income parents qualified for publicly funded  
            health coverage but were not enrolled.  According to the  
            Commonwealth Fund 2006 report, building on the remarkable  
            success of auto-enrollment strategies in other programs, many  
            children's advocates and state policy makers have made efforts  
            to place children into Medicaid and CHIP based on their  
            families' receipt of other means tested benefits, such as  
            assistance provided under the National School Lunch Program,  
            the Special Supplemental Program for Women, Infants, and  
            Children, or the Food Stamp Program.  A significant hurdle,  
            highlighted in the report, were the limitations and  
            incompatibility of the computer systems used by different  
            public benefit programs often necessitating manually  
            processing paper applications and verifications.  The report  
            points to this as being a particular hurdle in California with  
            information divided among various systems and among the 58  
            counties.  One recommendation called for enhanced IT systems  
            and infrastructure to allow automated queries, interfaces  
            between programs and systems, and facilitating  
            auto-enrollment.  

          6)SUPPORT  .  The California Pan-Ethnic Health Network (CPEHN),  
            sponsor of this bill, worked with researchers last year from  
            the California Program on Access at UC Berkeley on a series of  
            group interviews with low-income, racial, and ethnic  
            populations, including adults with Limited English  
            Proficiency, to learn how information about health coverage is  
            obtained, shared, and acted upon.  The focus groups that CPEHN  
            helped to conduct provided insight into how communities of  
            color understand the benefits of the ACA and the barriers they  
            face enrolling in current programs.  The group interviews  
            found that some racial and ethnic groups are more aware of the  








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            benefits under the ACA than others.  For example, participants  
            from Latino and African-American communities had heard of  
            certain aspects of the ACA, such as the mandates on  
            individuals to purchase insurance and employers to offer  
            coverage.  Some also knew of the coverage expansion for  
            low-income adults.  However, Native American and Asian  
            respondents were less informed and felt less comfortable about  
            their knowledge of the ACA.  Focus group participants  
            suggested that multiple mediums should be utilized to reach  
            their communities with accurate, accessible, and  
            linguistically appropriate messages.  Participants noted that  
            community organizations, schools, and trusted community  
            institutions such as churches, child care centers, libraries,  
            and community health centers also need to play a role in  
            educating and enrolling communities of color.  CPEHN concludes  
            that this bill provides parents with critical, updated  
            information about new health care options.

          The California Chiropractic Association (CCA) states in support,  
            that the notification provided by this bill is essential to  
            the implementation of the ACA.  According to this supporter,  
            many Californians are still uncertain about the steps they  
            need to take in order to comply with the new requirements  
            contained within the ACA.  CCA further states in support that  
            it believes that affordable access to health insurance will  
            help reduce overall costs within the health care delivery  
            system by encouraging early treatment interventions and by  
            potentially reducing chronic illnesses that could have been  
                                                                       prevented with better access to care.  The California Teachers  
            Association (CTA) also in support, states that it believes  
            that healthy kids learn better.  On the other hand, CTA  
            argues, health problems are likely to escalate due to lack of  
            health insurance, affecting a child's ability to learn and the  
            parent's ability to work.  CTA further states that although  
            children and families may be eligible for this new coverage  
            option, many parents are unaware.  Health Access California  
            states in support that reaching out to individuals and  
            families who are likely to qualify for free or subsidized  
            coverage is critical to its goal of achieving massive  
            enrollment on day one.  Children who qualify for free or  
            reduced lunch are extremely likely to qualify for health  
            coverage. 

           7)RELATED LEGISLATION  .  AB 1233 (Chesbro), pending in the  
            Assembly Appropriations Committee, authorizes  








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            federally-recognized American Indian tribes and tribal  
            organizations to use CalHEERS to facilitate Medi-Cal  
            eligibility determinations using CalHEERS as a Medi-Cal  
            Administrative Activities-specific activity.

           8)PREVIOUS LEGISLATION  .  

             a)   AB 970 (De León) of 2012 would have authorized, upon  
               consent of the applicant, information provided for the  
               single state application for health subsidy programs to be  
               used to initiate a simultaneous application for the  
               California Work Opportunity and Responsibility to Kids  
               (CalWORKs) or the CalFresh programs and would have required  
               the California Health and Human Services Agency to convene  
               a work group of stakeholders, as specified, to consider the  
               feasibility, costs, and benefits of integrating application  
               and renewal processes for additional human services and  
               work support programs with the single state application for  
               health subsidy programs.  SB 970 was vetoed by Governor  
               Brown stating this bill is well-intentioned but overly  
               prescriptive in its requirements.  Codifying another  
               workgroup and requiring another report are not necessary.   
               The Governor continued that his Administration has worked  
               and will continue to work with the Legislature and  
               stakeholders in transparent and cooperative ways to  
               implement the requirements of the ACA. 

             b)   AB 792 (Bonilla), Chapter 851, Statutes of 2012,  
               establishes notification requirements about the  
               availability of reduced-cost coverage available in the  
               Exchange and no-cost coverage available in Medi-Cal to an  
               individual filing a dissolution or nullity of marriage,  
               divorce or separation, or petitioning for adoption or for  
               an individual who ceases to be enrolled in health coverage  
               through a health plan or health insurer.

             c)   AB 714 (Atkins) of 2011 would have established  
               notification requirements to individuals who are enrolled  
               in, or who cease to be enrolled in, publicly funded state  
               health care programs, would require an application for  
               coverage to be made on their behalf through the Exchange,  
               and would allow individuals to decline health care coverage  
               in a manner to be prescribed by the Exchange.  AB 714 was  
               held on suspense in the Senate Appropriations Committee. 









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             d)   AB 1062 and SB 900 establish the structures and duties  
               of the Exchange to comply with the mandate on the states.

             e)   SB 1196 permits information from an application for the  
               School Lunch Program to be used to determine eligibility  
               for HFP and any other county- or local-sponsored programs,  
               as defined and as applicable, if the parent has granted  
               consent when a child does not meet eligibility requirements  
               for Medi-Cal.

             f)   AB 59 provides expedited Medi-Cal eligibility to  
               children participating in the free meals School Lunch  
               Program and their parents, if they chose to participate in  
               the Medi-Cal program and authorized the release of  
               information on their school lunch application. 

             g)   SB 493 (Sher), Chapter 897, Statutes of 2001, implement  
               a simplified eligibility process as part of the Food Stamp  
               Program to expedite the enrollment of individuals and  
               families in the Medi-Cal and HFP.

           9)POLICY COMMENT  . 

              a)   Horizontal Integration  .  It is apparent that the  
               experiences and recommendations reflected in the  
               Commonwealth Report from 2006 about the challenges of auto  
               enrollment in CHIP influenced the drafting and  
               implementation of the ACA.  The coverage expansion is built  
               around a simplified, streamlined single application process  
               with automated enrollment and verification systems.  The  
               ACA provides substantial funding to states to upgrade their  
               Medicaid IT systems for this purpose is establishing a  
               national database hub and will allow states to use Internal  
               Revenue Service data for income verification for the first  
               time.  However, the massive IT undertaking needed to  
               establish the state based Exchanges (or the federal  
               exchange for states that chose not to develop a state-based  
               exchange) has put the idea of auto-enrollment from one  
               program to another on hold for the present.  At the state  
               level, Covered California is planning to include a question  
               on the application asking if someone in the household would  
               like a referral to a local agency for more information  
               about CalWorks or CalFresh.  Ideally once the IT systems  
               are in place and enrollment has begun, the next step will  
               be to coordinate with other income-based public programs.   








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               This bill is a small step towards this goal by requiring  
               information about the new coverage opportunities to be  
               included in the School Lunch Program application.  

              b)   HFP  .  This bill adds provisions to a notification that  
               includes information regarding enrollment in HFP.  This  
               language could become obsolete once all children have  
               transitioned to Medi-Cal.  However, as the transition will  
               not be concluded until after September 2013, and is  
               dependent on additional federal approval, it is premature  
               to make changes in the HFP provisions. 

           REGISTERED SUPPORT / OPPOSITION  :  

           Support 
           California Pan-Ethnic Health Network (sponsor)
          100% Campaign
          American Federation of State, County and Municipal Employees,  
          AFL-CIO
          California Chiropractic Association
          California Coverage and Health Initiatives
          California Optometric Association
          California Primary Care Association
          California School Employees Association
          California Teachers Association
          Children Now
          Children's Defense Fund-California
          Children's Partnership
          Health Access California
          National Association of Social Workers - California Chapter
          PICO California
          United Ways of California
          Western Center on Law and Poverty
          Numerous individuals

           Opposition 
           None on file.
           
          Analysis Prepared by  :    Marjorie Swartz / HEALTH / (916)  
          319-2097