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State officials expect this expansion of the Healthy Families Program, the state's separate Children's Health Insurance Program (CHIP), will enroll an estimated 132,000 additional children by September 2001.

California is eligible to receive as much as $850 million in new funds for fiscal year 1999. CHIP is historic, bipartisan legislation signed in 1997 by President Clinton. The CHIP law allocates $24 billion over five years to help states expand health insurance to children whose families earn too much for traditional Medicaid, yet not enough to afford private health insurance.

California, like all states with CHIP plans, will receive federal matching funds only for actual expenditures to insure children. Together, the 56 state and territorial CHIP plans anticipate providing health insurance coverage for more than 2.6 million currently uninsured children within three years.

"The Clinton Administration and the states are working together to give children the health care they need to live longer, healthier lives," said Secretary Shalala. "It's a pleasure to approve the California amendment and I look forward to more states expanding their CHIP programs in the future."

CHIP gives states three options for devising a plan to cover uninsured children: designing a new children's health insurance program; expanding current Medicaid programs; or a combination of both strategies. HHS must approve any expansion of a state's original CHIP plan before additional CHIP funds can become available.

The state's original CHIP plan, a Medicaid expansion and the creation of a separate CHIP program, was approved by Secretary Shalala on March 24, 1998. The Healthy Families Program is a separate insurance program established by the state to cover children whose families have income between 100 percent and 200 percent of the federal poverty level. Today's proposed amendment will raise the eligible family income from 200 percent to 250 percent of the federal poverty level. As of November 1999, the original plan had enrolled more than 230,000 children.

This amendment also expands retroactive coverage for medical services from 30 days to 90 days prior to enrollment in the Healthy Families Program. That means that the Healthy Families Program will pay medical bills for covered services that were provided as much as three months before a child enrolled.

Additionally, this amendment permits applying Medi-Cal income deductions when determining the income level of Healthy Families Program applicants. These income deductions will expand the number of California families with incomes under the 250 percent of the federal poverty level limit that will be eligible for Healthy Families Program. The current federal poverty level for a family of four is $16,700.

Benefits provided under the Healthy Families Program match those provided to state employees in the California Public Employees Retirement System. Beyond those benefits, the Healthy Families Program also provides comprehensive dental and vision coverage, screening and initial treatment through the Child Health and Disability Program, and treatment for severely ill children in a non-managed care delivery system.

Healthy Family Program benefits are delivered through a managed care model. Most of the participating plans are health maintenance organizations (HMOs). Premiums in the Healthy Families Program range from $4 to $27 a month depending on the number of children in the family, the plan selected, and the family's income level. Families who prepay three months of premiums do not have to pay for the fourth month. In the Healthy Families Program, no copayments are charged for prenatal, well baby, well child, or immunization services. The copayment for all other services is $5, but the family cap on copayments is $250 a year.

"The California amendment is a positive demonstration that CHIP is working and that states are enthusiastic about this program," said Nancy-Ann DeParle, administrator of the Health Care Financing Administration, which administers CHIP, Medicaid and Medicare. "It is through efforts like California's Healthy Families Program that we will realize the administration's goal of providing health insurance to those who need it."

"We're pulling together to help hard-working, low-income parents give their children the same kind of high quality health care that others take for granted," said Claude Earl Fox, M.D., M.P.H., administrator of the Health Resources and Services Administration, the agency working with HCFA and states to implement CHIP. "Free or low-cost health insurance is what families need to ensure their children can grow up strong and healthy."

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