Short Takes On News & Events

Advocates Say California Is Rejecting ‘Free Money’ To Renew Poor People’s Insurance

By Anna Gorman

July 4th, 2014, 2:10 PM

This KHN story can be republished for free. (details)

Consumer advocates and some legislators were surprised and frustrated when California health officials recently refused a $6 million donation to help people re-up their Medi-Cal health coverage.

Now two senators have proposed an unusual solution: a bill to force the state to accept the offer from The California Endowment.

Photo by Calsidyrose via Flickr

Sens. Ed Hernandez and Mark Leno, both Democrats, said the money from the health care philanthropy is needed to help people through the process of keeping their health coverage. Moreover, taking the money would make the state eligible for another $6 million in matching funds from the federal government, they say.

“I can’t see leaving money on the table,” Hernandez said Thursday. “It doesn’t cost us a penny.”

The state Department of Finance, however, has said it doesn’t need the money. “We think this is just a duplication of efforts,” Keely Boster, chief deputy director of the department, said in a legislative hearing last month.

The state is already faced with a backlog of new Medi-Cal applicants because of the program’s expansion under the federal health law. Now, advocates say, it is imperiling continued access for existing beneficiaries.

“It’s a head scratcher to me,” said Kristen Golden Testa, health director of The Children’s Partnership, a nonprofit child advocacy organization. “Free money to help keep people covered seems to make a lot of sense to me.”

The decision was all the more perplexing given that California accepted a gift of $26.5 million last year from The California Endowment to help with expanded Medi-Cal enrollment, advocates said. Medi-Cal is the state’s version of the Medicaid program for low-income residents.

This time, the funds would be used help counties and community-based organizations complete renewals for beneficiaries, who must go through an annual process to ensure they continue to be eligible.

Advocates suggested that the state may not want the added cost of covering people who might otherwise drop out of the program – a common phenomenon among the poor and sometimes transient Medi-Cal population.

The state is responsible for about 50 percent of the costs of Medi-Cal beneficiaries eligible for coverage before Obamacare passed. The federal government is initially covering the entire cost for people who are newly eligible under the law.

If the state doesn’t accept the donated funds, about 3,600 people are expected to lose coverage, saving the state more than $8 million, according to a finance department document.

“We are very concerned that the state is putting up a lot of roadblocks,” said Judy Darnell, director of public policy at United Ways of California.

The Affordable Care Act expanded those eligible for Medi-Cal to childless adults and people who earn up to 138 percent of the federal poverty level, or about $16,000 for an individual and $27,000 for a family of three. California enrolled nearly two million people in the program, bringing the state’s total to 10.6 million. In addition, the state is facing the backlog of about 600,000 new applications.

At the same time, as many as one million beneficiaries each month are expected to seek annual renewals of their coverage, according to the Department of Health Care Services.

Department of Health Care Services spokesman Tony Cava said the renewals and the new applications together is “quite a large task” for the counties. “It is all happening at the same time,” he said.

Cava said he could not comment on the pending legislation.

Sen. Leno said at a recent legislative hearing that failing to accept the funds from The California Endowment “would be bureaucratic waste at its worst.”

“To deny this offer of financial support would be counterproductive and antithetical to the very reason that we did participate in Medi-Cal expansion,” he said.

New rules make the renewals different and more confusing this year, according to Elizabeth Landsberg of the Western Center on Law & Poverty, one of the co-sponsors of the Senate bill.

“Anything we can do to help consumers … will help streamline the process,” she said.

Kaiser Health News’ coverage of California is supported by The California Endowment.

4 Responses to “Advocates Say California Is Rejecting ‘Free Money’ To Renew Poor People’s Insurance”

  1. Issac says:

    Some, mostly Republicans, would have you believe that America is the wealthiest nation on earth. If that is true, then tell me why are 50 million Americans are still uninsured and are still getting (uncompensated) healthcare at hospital emergency rooms? Meanwhile those same hospitals that are providing uncompensated care are slowly going broke and, one by one, are closing their emergency rooms. Wealthiest nation on earth? Yeah! Right! Maybe for the top 1 percent of the population that are composed primarily of millionaires and billionaires! Seems to me, while our broken healthcare system continues to cost Americnas twice as much as any other industrialized nation on earth, Wall Street continues to do just fine. Wall Street shysters continue raking in more and more profits from their healthcare stocks while the poor and the middle-class die by the thousands for lack of affordable healthcare and affordable prescription medicines. Wealthiest nation on earth? Don’t make me laugh!

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  4. Ray says:

    It’s worth mention, at least more succinctly, that by accepting $6M in funds, CA actually spends $2M more on this program that’s unsustainable in the first place. 3,600 people (00.3% of the 10.6M total) will be kept on, a retention cost of $1,667.00 per person. That is totally sunk-no care or benefit is provided, this merely covers the cost of employing people to help with renewals. All the renewals can still happen, this is just to manually contact and assist a portion of the people who don’t do it themselves like they are supposed to.

    CA then incurs an additional $8M in costs to actually insure them, with a possible $6M in gov’t matching funds.

    This isn’t $6M of free money, it’s a $6M project funded by an outside source to create an additional $8M of cost to the state, or in other words, a net $2M cost after federal matching of the initial funding.