SACRAMENTO -- Advocates on Monday made a last ditch effort to persuade Gov. Jerry Brown and Democratic leaders to back down from a plan to eliminate Healthy Families, the medical insurance program that serves children from low-income working families.

Axing the program to save tens of millions of dollars is a key provision in the budget that Brown and Democrats worked out last week as part of an agreement that spared more painful cuts to safety net programs for the poor. More than 900,000 children would be required to change to the Medi-Cal system over the next year and a half, forcing them to find new doctors in what critics say is an already overwhelmed system.

"Medi-Cal already faces serious challenges in providing access for 3.5 million kids served by it today, and it's straining to serve them well," said Wendy Lazarus, founder and co-president of The Children's Partnership, which outlined demands in a letter co-signed by 64 groups.

"But by putting added pressure on a very fragile Medi-Cal system now, the plan will endanger access to care for as many as 4.5 million kids."

Healthy Families provides medical, dental and vision care for children who don't have insurance but who do not qualify for Medi-Cal. A family of four can make up to $30,000 and qualify for Medi-Cal, while a family of four can qualify for Healthy Families with an income of up to $56,000.

Democrats on Monday began taking up 21 trailer bills that will enact various aspects of the budget, including one specifically on Healthy Families. They will work through the bills in committee before taking a vote on Wednesday. That is the last day Brown can take action on the budget: He can either veto it, veto parts of it, sign it, or take no action, which would automatically enact it into law.

Only a majority of votes are needed for each bill in both houses, so Democrats, who have wide majorities in each house, could spare a handful of no votes. If enough rise up against it, the budget deal would collapse with the end of the fiscal year looming. That doesn't look likely, however, as advocates can count only two Democratic lawmakers opposed to the dissolution of Healthy Families. They need a minimum of seven to block it in the Senate and 12 in the Assembly.

Sen. Leland Yee, D-San Francisco, is one who opposes the dissolution, along with Assemblyman Richard Pan, D-Sacramento. Yee said if he can't persuade colleagues to support abandoning the plan to eliminate Healthy Families, he wants a strong assurance that children moving to Medi-Cal won't lose coverage.

"It's incumbent on all of us to do what we can to change the governor's mind," Yee said. But short of that, he wants to "ensure children in Healthy Families are not going to be left holding the bag."

One of the biggest concerns is that doctors who receive Healthy Families patients do not accept Medi-Cal patients. Doctors and health providers receive a higher reimbursement rate from Healthy Families than from Medi-Cal.

By dissolving Health Families, the savings would net $13 million for the rest of this year, and another $54 million next year and $78 million the following year. But the state stands to lose millions of dollars in federal matching funds that will be cut off once Healthy Families is dissolved, critics said. And it will likely forfeit $200 million for each of the next two years that it would have gotten through an industry-paid managed care organization tax, which helps fund Healthy Families.

The tax is set to expire at the end of the month, and extending it would require a two-thirds vote, and Republicans, who have criticized the move to shutter Healthy Families, are unlikely to vote for it.

"This has the potential to make our budget worse, not better," said Anthony Wright, director of Health Access California. "In order to get a little savings now, we're potentially blowing a bigger hole in the budget in the future, one that will reverberate onto kids' programs and kids' services."

Contact Steven Harmon at 916-441-2101. Follow him at Twitter.com/ssharmon. Read the Political Blotter at IBAbuzz.com/politics.

How eliminating healthy families would save money

Next steps in approving the budget

  • The Brown administration and legislative leaders say that the state would save $13 million in administrative costs in the current fiscal year, then $58 million and $73 million in the next two years by folding Healthy Families' enrollees into Medi-Cal.
  • In moving children to Medi-Cal, the state would not have to pay the higher reimbursement rates that Healthy Families pays to doctors.