California Could Lose $2.7 Billion in Kids' Health Funding - and There's No Backup Plan

Nearly two months after Congress missed its deadline to renew funding for the Children’s Health Insurance Program (CHIP), California is just a few weeks away from exhausting its reserves, and doesn't yet have a plan to replace the $2.7 billion in federal support it stands to lose.

"The reason that there’s no plan B is that there’s no good options," said Anthony Wright, executive director of the advocacy group Health Access.

CHIP provides Medi-Cal coverage for children whose parents make too much to qualify for the program. The cutoff point is 266 percent of the federal poverty level, or about $65,000 for a family of four.

California officials project the state will run out of money for the program around the end of the year. Even if it does, California is legally obligated to continue providing coverage for almost all of the children who qualify. Pregnant women, who make up less than 2 percent of those in the program, would lose their coverage without a new infusion of federal dollars.

Last year 2 million California children received health care through CHIP.

Since the federal government funds 90 percent of the $3 billion program, Gov. Jerry Brown and the state Legislature would have to find new sources for the money elsewhere in the budget.

The office of Assemblyman Jim Wood (D-Healdsburg), chairman of the Assembly Health Committee, acknowledged that the Legislature doesn’t have a backup plan at this point. Wood recently attended a Sacramento rally to urge Congress to renew both CHIP and a federal grant program for community health centers.

"We wait while health care for these children and adults hangs in the balance," he said, adding that he came to the rally "to demand that Congress act now to reauthorize this critical funding and recognize that these people are not numbers -- they are our family members, our neighbors and our friends."

Sen. Ed Hernandez (D-West Covina), chair of the Senate Health Committee, did not respond to requests for comment.

If Congress fails to renew the money before it runs out, "the state would be forced into a Sophie’s Choice," said Wright.

Lawmakers would have to make cuts, "if not to children’s coverage then to other critical programs and services," he said.

Kelly Hardy, senior managing director of health policy for the advocacy group Children Now, agreed.

"I really don’t see a way for the state to close a budget gap of that size without hurting kids and families," she said.

The state doesn’t have a backup plan because it's counting on Congress -- which has backed CHIP for years on a bipartisan basis -- to ultimately renew the program, said Wright.