Legislature Agrees to Healthy Families Solution
In response to budget cuts to the Healthy Families program, the California Legislature passed and the Governor signed AB 1422, the California Children and Families Act of 1998, to restore some funding and avoid disenrolling as many as 600,000 kids.  The legislation imposes a new 2.35% tax on operating revenues of Medi-Cal managed care plans, which is expected to generate $150 million annually.  Under the proposal, 62% of these proceeds would be used to fund Healthy Families, which will be matched two-to-one by federal funds.  The new tax replaces the Quality Improvement Fee currently paid by health plans, which sunsets on October 1.   Since the cost of the tax to managed care plans is half what they currently pay under the Quality Improvement Fee, managed care plans are supportive.  The bill also increases Healthy Families premiums and allows the Managed Risk Medical Insurance Board to adopt regulations through 2011 to modify benefits, program requirements and operations on an emergency basis without demonstrating the need for urgency.  CMA believes AB 1422 is a "win-win" that temporarily restores desperately needed Healthy Families funding while a long-term solution can be identified.