Funding for kids health care programs unraveling

SANTA CRUZ -- Donna Gilmartin was worried. She'd moved back to Santa Cruz in 2007 and she still had no insurance for her 10-week-old son, Bryce.

Working part time as an audiologist, Gilmartin didn't qualify for benefits. But her boss told her about a county-administered children's insurance program called Healthy Kids. Gilmartin immediately enrolled her son, who stayed with the program until she landed a full-time job with benefits a year later. Healthy Kids, Gilmartin said, was a "blessing."

"It's 2 in the morning and he's got a fever so high he can hardly lift his head up," Gilmartin said. "You want to know if it's serious. You want the doctor to evaluate it. And we wouldn't have had that option, or had it less, because you have to pay and it's so expensive."

Until recently, outcomes like little Bryce Gilmartin's had local health advocates beaming. In 2007, a biannual survey conducted by the UCLA Center for Health Policy Research reported 98 percent of Santa Cruz County's 58,000 children were insured -- one of the state's highest rates of kids' coverage.

Today, a little more than two years and a battered economy later, that euphoria is gone, replaced by frozen enrollment and deep concern among local health advocates that the trend toward total coverage for the county's children has reversed itself -- and that the future of Healthy Kids itself is murky, at best.

Citing their own financial constraints and concerns about Healthy Kids' sustainability without state government support, several major foundations are pulling back their long-term funding for the program in Santa Cruz -- and in 28 similar programs around the state. As a result, counties already pinched by a crushing state fiscal crisis are scaling back their programs or, in some cases, closing their doors entirely.

There is likely more bad news to come. Gov. Arnold Schwarzenegger, facing a $19.9 billion budget deficit, recently proposed tightening eligibility requirements for the state's Healthy Families program, which could eliminate coverage for more than 200,000 California children from low-income families, including 1,600 Santa Cruz County kids. Last year, the governor considered eliminating the program altogether; this year, erasing it remains a contingency plan.

With Healthy Kids already concerned about its ability to absorb additional children thrown onto the uninsured rolls by the weak economy, the picture that could result from the state's cutback or elimination of its Healthy Families program is a foreboding prospect.

The worst case scenario for the local program, says Leslie Conner, program and policy director at the Health Improvement Partnership of Santa Cruz County, which manages Healthy Kids: "It goes away."

Dr. Garry Crummer reviews patient paperwork in his Capitola office. He often talks to patients’ parents on the phone, instead of examining them in his office (Phil Carter/Special to the Sentinel)

150k kids covered

Over nearly a decade, the program Conner administers has, along with similar programs across the state, provided coverage to 150,000 California children who don't qualify for any other insurance. Traditionally, the majority of these have been undocumented kids; with a smaller subset of children whose parents earn just enough to disqualify them from other low-income programs. But increasingly, many participants now are middle-class children with working or even professional parents hit hard by the economic downturn. For all of these families, the program's message has been simple and welcoming -- "come to us, and we'll find a way to insure your kids."

Healthy Kids' 30 bilingual outreach workers are stationed around the county to help eligible low-income families sign up their children in federal and state public insurance programs, primarily Medi-Cal and Healthy Families. And they enroll children who don't qualify for the other programs in the locally funded brand of health insurance: Healthy Kids.

"Healthy Kids has been a real focal point for feeling like we could make a difference, we could control the health care reform in our community," said Rama Khalsa, chief of the Santa Cruz County Health Services Agency and one of the program's early champions.

For years, Healthy Kids' supporters harbored hopes that eventually the state would grab onto its successful model and decide to fund it for all counties. Among other attributes, its supporters pointed out, by providing insurance to poor children, the program substantially reduced the number of emergency room visits by families who had nowhere else to turn.

In Santa Cruz, the program received support from a diverse array of interests -- among them the county, statewide foundations, hospitals and physicians' groups, private donors and the local First 5 commission that administers tobacco tax monies. Those donations were then funneled to the Central California Alliance for Health, a nonprofit public insurance plan already responsible for insuring the county's Medi-Cal population. The alliance insures each of the program's children age 6 and up for $1,020 a year; insuring each younger child costs $1,620.

By early 2008, these various players thought they had achieved success. Researchers from the Urban Institute, Mathematica Policy Research and USC had examined various counties' programs and documented impressive results in everything from increasing access to preventive medical and dental care to decreasing the number of unnecessary hospitalizations and missed school days. The programs were being described as potential models for the rest of the nation.

Now, none of this seems likely to save them.

In Santa Cruz, as of mid-January, more than 159 kids ages 6 to 18 sat on the Healthy Kids waiting list, which has been growing since enrollment for children over 5 was frozen last June. In 2008, when fears of inadequate funding forced the program to establish a wait list for a time, it eventually grew to almost 500 children before funding was secured.

Some 80 percent of the 1,950 children currently served by Santa Cruz' Healthy Kids are from families that earn less than 150 percent of the Federal Poverty Level -- the poorest of the poor. For families with income above that level, administrators are raising premiums this month for the first time in the program's history. Contingency plans could eventually include disenrolling older children in an effort to keep the program running for as long as possible.

By the end of 2008, according to Census data, some 4,000 Santa Cruz County children were uninsured. Khalsa suspects those numbers have grown significantly since then.

She, like almost all the pediatricians, safety net workers, county health officials, philanthropists and families interviewed for this article, believes that all children should have health insurance, regardless of their parents' ability to pay or their immigration status.

The question they are grappling with is: Who can afford to pay for it? Parents? Employers? Philanthropists? Hospitals? A state government teetering on the brink of fiscal disaster?

Some 3,000 miles away, Congress is moving haltingly closer to a federal solution that may eventually mitigate some of the nation's health care coverage woes. But whatever the federal reform -- and after Tuesday's election results the probable content of any forthcoming legislation is even less clear -- actual implementation would still be years away. Even then, many California children currently served by Healthy Kids would not be eligible for federal help due to their immigration status.

After a decade of optimism, the movement to insure all children has arrived, quite suddenly, at a significant crossroads.

"I think we're at an incredibly important and delicate juncture where decisions made over the next two to three months could govern for decades how well we take care of our kids," said Wendy Lazarus, co-founder and president of The Children's Partnership, a Southern-California-based children's advocacy group.

Dr. Jim Bennett examines patient Otto Redlien in his Capitola office (Phil Carter/Special to the Sentinel)

Perfect storm

Health advocates, pediatricians, dentists and county officials here -- and around California -- describe a perfect storm of need and economics: the number of uninsured kids is burgeoning, while the financial resources these programs depend on to meet the need are disappearing.

As families experience their own economic dislocation and monthly bills pile up, even middle-class parents are being forced, for the first time, to make what feel like impossible decisions -- between mortgage payments, groceries or health insurance.

Last year, Anthony Gray faced just such a dilemma: Pay the mortgage on his family's home in Live Oak; or pay for health insurance for his wife and three kids. For years, such costs hadn't concerned him. Gray, who says he has an MBA from San Francisco State, made good money doing contract accounting work. But, as the economy tanked in 2008, he says work began to taper off. In a quest for stability, Gray took a full-time accounting job -- and a significant pay cut.

To cover his family's medical insurance needs, his employer subtracted a few hundred dollars from every biweekly paycheck. Despite Gray's accounting prowess, he couldn't make the numbers add up. The cost was increasing. His insurance, he said, seemed to cover less and less. He looked around for more affordable options. Eventually, he thought he had no choice but to stop paying his family's health insurance.

"I made a calculated decision that it's more important to have them in a safe neighborhood," Gray said.

Health advocates across the state are increasingly concerned about the prospects for the growing ranks of uninsured children they're seeing. Local doctors worry just as much about those whom they're not seeing.

Dr. Jim Bennett, a Capitola pediatrician, said that in the past two years about 15 to 20 percent of the children his practice sees have shifted from private insurance to publicly funded insurance plans -- or to no insurance at all. Parents of families with decent insurance might have waited a week or two in the past before making an appointment for an asthmatic child with a lingering cold. Without insurance, these same parents now wait a month. When the children finally arrive in Bennett's office, their illnesses have sometimes become severe.

"The tragedy is, it's so out of their hands," Bennett said. "They're the collateral damage of our inefficient health care system."

Dr. Garry Crummer, a pediatrician who is affiliated with the Dominican network, said many parents are now calling him for advice about their children's medical conditions because they can't afford an office visit.

He often takes the sometimes long calls -- although he doesn't bill parents for his time -- and will reserve sample drugs for those who can't afford to buy medication. Recently, he's also noticed more families foregoing vaccinations for children because of the cost.

Crummer worries that the loss of insurance for children means they'll have no personal doctor "that knows you and knows your family and follows you well."

"People are not going to have as much access to preventative care," he said. "The kinds of extreme illness could increase, and there could be more hospitalization."

A once rosy picture

Until recently, the local Healthy Kids program had shown spectacular results. The 2001 California Health Interview Survey data for pre-Healthy Kids Santa Cruz County showed that, despite the existence of other state assistance programs, 6.7 percent of the county's kids were left uninsured. In 2007, after Healthy Kids had been in place for three years, only 2.1 percent were uninsured.

While the 2009 CHIS data will not be released until later this year, few in the county believe the picture it paints will be nearly so rosy. And 2010 prospects are not good.

Local advocates, already worried about the future of Healthy Kids, say the latest news out of the governor's office has them even more on edge.

"Healthy Kids looks at the Healthy Families program being threatened and, yes, we're concerned about 2010 and beyond," said Conner, whose agency manages Santa Cruz' Healthy Kids program.

Local coalitions across the state are suddenly finding themselves in a similar fight to save their children's health insurance programs. And they're not always winning.

More than a year ago, after financially strapped Alameda County decided to redirect dollars that had funded their local Healthy Kids, that program was forced to shut down. Others may soon follow suit. At least one program -- which covers Sacramento, Colusa, Yuba, El Dorado and Placer counties -- says it plans to start disenrolling children starting this spring.

Foundation representatives say they struggled with the decision to end their support for the county children's health initiatives. Over the past decade, The Packard Foundation has invested $22 million, the Blue Shield of California Foundation $34 million, and the California Endowment $60 million.

Representatives from the three foundations say they never intended to fund such programs indefinitely, something Healthy Kids' advocates say they knew. In fact, the foundations extended their commitments longer than planned. The original goal, they say, had been to support Healthy Kids for a few years, show that the model worked, then have the state take over and expand the program to include all eligible children.

"It was a really difficult decision for our board to make; they and this foundation are committed to health care," said Brenda Solorzano, chief program director for the Blue Shield of California Foundation. "These kinds of programs are not sustainable simply by foundations pouring money into them. California really needed to find some systemic solution."

Now that financial crisis has driven the state to its knees, a statewide adoption of Healthy Kids seems highly unlikely. Seeing this, the foundations -- also more strapped for cash these days -- are redirecting their money to other efforts.

Conner says she understands that Healthy Kids was never designed to be maintained long term by counties.

"The idea was to use evidence to move state policy," she said. But when Healthy Kids was formed almost a decade ago, she added, the state budget was in much better shape than it is today.

To save the local Santa Cruz Healthy Kids program, she and the program's leadership are calling in all the support they can muster. In the near-term, thanks in part to a new $500,000 pledge from the Central California Alliance for Health, the program will likely remain alive through 2011, although in a reduced form.

That money is a one-time pledge, drawing on a reserve the plan has accumulated over the years. To guarantee care for the kids currently on Healthy Kids rolls, the program will not enroll new children ages 6 and older. As it shrinks, says Khalsa, "it will be a pale reflection of the need."

Families who have counted on Healthy Kids to help insure their children during these tough times say they worry about what might happen if the program should discontinue.

Anthony Gray knows that fear.

While his 4-year-old daughter is currently enrolled in Healthy Kids, his older two children, ages 8 and 11, are on the waiting list -- and he understands they probably won't get off anytime soon. Gray is searching for affordable health insurance for them; and for a way to earn more money.

The two times he's had to take his kids to the emergency room -- once with a fever, once with a hurt ankle -- he's done so without hesitation.

"The children's health has to come first," he says. "No matter what."

Each visit cost him more than $1,000, which he's paid off in installments. At some point soon, he figures, he'll need to cash in his 401k.

"If people like me can't afford health insurance," he wonders, "what are all the other people doing?"

Sentinel staff writers Jim Brown and Megha Satyanarayana contributed to this story. Jocelyn Wiener works for the California HealthCare Foundation Center for Health Reporting.

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