Governor Urged to Fund FamilyCare Fully in '04 Budget

Thousands of people are writing to Gov. Rod Blagojevich to urge him to  fund the state’s share of the FamilyCare program fully in his budget proposal. The governor, who expressed support of FamilyCare in his recent “State of the State” address, is to announce his budget plan on April 9.  Full funding for FamilyCare would allow the program to cover around 300,000 people, mostly working parents.  The state’s 35 percent share of  the cost of full implementation would mean $33 million in next year’s budget.  The federal government has agreed to cover the majority of the cost (65 percent).

Background. FamilyCare provides health insurance for parents and caretakers of minor children who are currently covered by KidCare or Medicaid.  Illinois received federal funding for the first phase—which includes about 28,000 people—of FamilyCare on October 1, 2002.   Under past law, Medicaid was available to parents and caretakers with family income at or below 39 percent of the federal poverty level, which is $558 per month for a family of four.   Phase one implementation of FamilyCare makes health insurance available to those with family income at or below 49 percent of the federal poverty level, which is $739 per month or $8,869 per year for a family of four.  As of late November 2002, the Illinois Department of Public Aid, or IDPA, had enrolled about 11,000 people for FamilyCare.

Full implementation. In addition to the federal funds for phase one, the FamilyCare waiver includes a favorable federal match for state expenditures.  The federal government promises to pay a 65 percent match for most of the expense of expanding the program to cover people with income up to 185 percent of the poverty level, which is $2,790 per month or $33,480 per year for a family of four.  This expansion has the potential to reach 300,000 more adults—ten times the number covered by the first phase. The federal funds come from the State Children’s Health Insurance Program, or SCHIP.

Cost to the state.  IDPA estimates that the state’s share of full expansion will cost $66 million; and the federal contribution covers the total cost, which is about $200 million.  In the 2004 fiscal year, however, the program  costs only $33 million due to normal delays in ramping up to full enrollment.

These cost figures will fluctuate depending on program enrollment, but IDPA’s estimates are based on 73 percent of eligible people actually enrolling.

Here are seven reasons to implement FamilyCare despite a tight state budget:

1. The FamilyCare waiver provides the state with an unusually good leverage opportunity for federal funds.

2. The federal funds come from an allotment already earmarked for Illinois but were lost because the state did not access it.  Illinois lost $159 million last September because of underutilization of the KidCare program.  FamilyCare is a strategy that keeps this federal money in Illinois.

3. FamilyCare helps working parents access primary and preventive health care, which keeps them healthy, productive, and employed.  And the state saves money over time since, when people lose their job or have an acute medical need that is avoidable, they depend on other state programs.

4. Employers benefit because workers are more productive.  FamilyCare also has a premium subsidy option that will help make it affordable for employees to stay in employer health plans.  Keeping workers, who are often healthier employees, in their employer health plan helps the actuarial performance of those plans and thus control premium increases for all employees.

5. Children are more likely to be insured and more likely to use primary health care when their parents are insured.

6. FamilyCare is good for health care providers because it decreases the uncompensated care burden.

7. This is an ideal initiative for the budget: smart leverage of federal dollars means help for workers, help for families, and help for the stressed medical system.

For more information, contact John Bouman, 312.368.2671 or johnbouman@povertylaw.org.