Capitol Alert

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Gov. Jerry Brown and Democratic leaders called their budget deal Thursday a "conceptual agreement" for good reason.

With floor votes planned in three days, Brown officials and lawmakers are still filling out major details of cuts to welfare-to-work and health care for low-income children that will determine exactly how the budget will impact programs.

Since taking office, Brown has sought to eliminate Healthy Families, which provides low-cost care to 880,000 children in working poor households that lack health insurance. Brown has argued that all publicly insured patients should be in Medi-Cal as matter of efficiency and to eliminate the challenges patients face when switching between Medi-Cal and Healthy Families as their family income fluctuates.

But health advocates who say Healthy Families works well and affords better care than Medi-Cal have begun mobilizing against Brown's demand to move those 880,000 children out of Healthy Families. Behind closed doors, Brown officials and Democratic lawmakers are trying to appease health care interests caught off guard by the elimination altogether of Healthy Families after they presumed the state would only shift about 190,000 of those children.

The latest example: Senate President Pro Tem Darrell Steinberg, D-Sacramento, told his caucus Friday afternoon that he had secured $30 million in state and federal funds from Brown for local health plans, according to an e-mail copy that two Capitol sources provided The Bee under condition of anonymity because it was a private communication. Local health plans are frustrated by the shift of patients from higher-reimbursement Healthy Families to Medi-Cal, as well as special conditions being granted to Kaiser Permanente to bypass the county-based plans.

"As part of the Healthy Families transition to Medi-Cal, I obtained an agreement with the Administration to establish a $30 million performance-based incentive payment for Two-Plan model counties," Steinberg wrote his Democratic colleagues.

One catch is that the $30 million would only be available if Brown and Democrats can convince enough Republicans to vote for a $183 million tax on managed care plans, according to Steinberg's e-mail. Under state law, the tax requires a supermajority vote. Steinberg said the difficult vote would likely not take place until August.

As we noted Friday, Republicans for now seem reluctant to pass the tax despite having done so in past years. They are opposed to the Democratic compromise to shift 880,000 children to Medi-Cal and have been sidelined in budget discussions between legislative Democrats and Brown.

The $30 million for local health plans - some of which operate in Republican districts - may be one sweetener to help convince the requisite number of GOP lawmakers to approve the managed care tax that Democrats will assume next week as part of their balanced budget plan.

Health care insurers who pay the tax have supported it in the past because the money comes back to them through Healthy Families patients and federal matching dollars. But with Healthy Families being eliminated and Medi-Cal providing a lower reimbursement rate, it remains to be seen whether insurers will still go along with the tax - and whether they would convince Republicans that the tax is appropriate.



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