Capitol Alert: Could Healthy Families dissolution cost California more money?

Democratic lawmakers portrayed a shift of 880,000 children from Healthy Families to Medi-Cal as a way to help bridge the state's $15.7 billion deficit, but opponents say there is good reason to think the change could actually cost the state more money.

Gov. Jerry Brown's administration is counting on $13 million in general fund savings in 2012-13 because only a partial shift will occur in the fiscal year - and only in the second half of the year. At full implementation, the state would save $73 million in 2014-15.

But shifting those children to Healthy Families risks the loss of $183 million in taxes on managed care plans. The tax is set to expire at the end of this month, and managed care providers previously supported the tax because it came back to them through Healthy Families patients.

Democrats need a two-thirds supermajority vote with Republican support to keep the tax going. If the industry is opposed, it is difficult to see how Republicans will sign on to the tax this summer.

Also, Republicans are far more favorable toward Healthy Families than Medi-Cal. In a statement Thursday, Senate Republican Leader Bob Huff, R-Diamond Bar, said, "This transfer of children from a popular and successful program like Healthy Families to the problem plagued Medi-Cal system is a reckless move that unnecessarily puts the health of California children at risk."

Because of the political hurdle, the vote for that managed care tax is already expected to come sometime beyond next week and after the governor signs the budget bill. Last year, Controller John Chiang cited a delayed enactment of the managed care tax as one of his reasons to declare the budget unbalanced and block pay for state lawmakers, though he no longer has the legal authority to make such interpretations.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, and his aides expressed guarded optimism Thursday they would be able to get enough votes to extend the tax. But advocates are doubtful.

"The thing I haven't been able to figure out is, does this mean we're giving up on the (managed care) tax?" said Health Access California Executive Director Anthony Wright, a critic of the Healthy Families dissolution. "At the end of the day, this may cost the state money."

The California Association of Health Plans has not yet taken a position on the tax or the latest budget deal. But spokeswoman Nicole Kasabian Evans said, "Health plans supported the (managed care) tax in prior years, and a lot of that was centered around the fact that it was tied to the Healthy Families program. To decouple the tax from the Healthy Families program, we'd really need to know a lot more than we know today. The details matter."