The Managed Risk Medical Insurance Board (MRMIB) administers five programs to provide health coverage to children and adults who do not otherwise have access to insurance. Essentially, it serves those considered medically uninsurable and “high risk,” a majority of whom have already been denied coverage by commercial insurance companies. The board, which receives most of its funding from the federal government,  helps provide health coverage through commercial health plans, local initiatives and county-organized health systems. The board also develops policies and recommendations for providing coverage to the state’s 6 million uninsured. Many of its programs, if they are still in place, will be replaced when President Barack Obama’s health care reform law takes full effect in 2014. But Governor Jerry Brown proposed in his 2012-13 budget  significant rate reductions in the largest program—Healthy Families, which provides health, dental and vision benefits for children who are not eligible for Medi-Cal—and the transitioning of 875,000 beneficiaries to Medi-Cal beginning in October 2012.

Managed Risk Medical Insurance Board (Legislative Analyst’s Office)

Health and Human Services (Ebudget summary) (pdf)

Details Surface on Moving Children from Healthy Families to Medi-Cal (Community Health Councils, Inc.)

The board was created by legislation passed in 1989 under Republican Governor George Deukmejian with the initial purpose of providing health insurance coverage for Californians who were being excluded from the market because of pre-existing conditions. The law established the Managed Risk Medical Insurance Program, making California the 14^th state in the nation with a high-risk insurance pool.

The five-member volunteer board was led by Health and Welfare Agency Secretary Clifford Allenby, who would serve as chairman on and off for two decades. The board became operational in 1991, with 400 subscribers and an enrollment target of 10,000. By the end of the year, the program was at capacity and had a long waiting list. Blue Cross of California and five other plans had contracts with the board to provide coverage to program members.

Also in 1991, Governor Pete Wilson signed into law Chapter 278, Statutes of 1991 (AB 99), establishing the Access for Infants and Mothers (AIM) Program. AIM was targeted at low and moderate income pregnant women whose assets made them ineligible for Medi-Cal. It also covered their infants for two years after birth.

The board expanded its reach in 1992 with the establishment by law of Health Insurance Plan of California (HIPC), a “statewide purchasing pool for small employers” that provided them with the same options made available to large companies. HIPC began with a network of 19 health plans and by the end of 1993, 32,587 employees and dependents were enrolled, comprising 1,909 small groups. Also in 1993, the AIM program was taken over by a new administrative health vendor called Health Care Alternatives, a subsidiary of Maxicare Health Plan.

In 1994, Blue Cross established a program similar to MRMIP as a way of serving applicants on MRMIP’s waiting list by offering them the option of purchasing coverage at a subsidized rate until they could join MRMIP. Also that year, AIM ran into funding difficulties and struggled for a few years. By the end of 1995, HIPC was the biggest small group pool in the country and in 1996 the board started looking for a non-profit entity to take it over. No agency responded. AIM was healthy and experiencing modest growth.

In 1997, Title XXI was added to the Social Security Act, establishing the State Children’s Health Insurance Program (SCHIP), which “made large grants to the states to cover children in working families with incomes too high to be served through state Medicaid programs.” Title XXI gave all states the option of expanding Medicaid or establishing a new program; California decided to do a combination of the two. In August of that year, the Healthy Families Program (HFP) was established, “providing the services of an expanded California Children’s Services Program to HFP children with severe or chronic health conditions, and using SCHIP funding to expand Children’s Medi-Cal.” Under the direction of the Department of Mental Health, services were also provided to “severely emotionally disturbed children” enrolled in HFP. A Healthy Families Advisory Panel was also established. The board also tried again to privatize HIPC, but dropped the effort after hearing strong protests.

In 1998, Electronic Data Systems Corporation (EDS) was chosen to administer HFP. The board also attempted to privatize the HIPC Program for a third time and this time was successful, with Pacific Business Group on Health taking over.

In April 1999, the board and DHS began the Single Point of Entry (SPE) at EDS.

Under SPE, a special unit at EDS screened joint applications for both HFP and Medi-Cal eligibility. Those eligible for Medi-Cal would be sent to the proper county welfare department and those eligible for HFP would be acted upon by EDS.

In 2001, the board collaborated with the Center for Child Health Outcomes for the Health Status Assessment Project in order to evaluate the impact of HFP coverage on the health status of children involved. The first results for the Health Status Assessment Project became available in 2002, revealing “an improvement in the physical and psychological health status for children in poor health when they entered HFP.” 

In 2002 Governor Davis challenged both the board and the health insurance industry “to develop a market-based solution for high risk individuals that improved access for high risk populations” without increasing the level of government spending. As a result, AB 1401 was passed, creating a four-year Guaranteed Issue Pilot Program limiting enrollment in MRMIP to no more than 36 consecutive months. Afterward, risk pool members lost their MRMIP eligibility “and all health plans and insurers in the individual market to offer an equivalent benefit package on a guaranteed issue basis, priced at 10% above the MRMIP premium rates and with a higher annual benefit maximum. This same year, the board became large enough to end its administrative relationship with the Office of Statewide Health Planning and Development (OSHPD). Later that year, the board established its own Personnel, Business Services and Budget Units.

In 2003, Governor Gray Davis signed the “Pay or Play” law, providing health coverage through employers or through state-run insurance pools for employees of firms with 200 or more employees. (In 2007, this was changed to employers with more than 50 employees.)

In 2005, the County Buy-In Program was established, enabling counties “who do not have the resources to manage a county health insurance program for children ineligible for HFP or Medi-Cal access the Administrative Vendor services of MAXIMUS and the established network of health, dental, and vision plans, put in place by the Board for the HFP.”

In 2006, the HFP application process was simplified, making an electronic application process available called Health-e-App.

In 2011, Governor Jerry Brown signed ABX1 21 into law, extending a tax placed on managed health care organizations. The money is being used to fund Healthy Families, staving off “a possible $130 million shortfall of state funds. Before the passage of the bill, California was considering serious enrollment cuts; “non-passage of the bill would have cut 37% of Healthy Families’ total budget.”

Governor Brown recommended in May 2011 that the board be abolished and its functions moved to other departments and local levels in anticipation of  President Obama’s scheduled 2014 health care reform. The Legislature rejected the request, but plans are still underway for transitioning of many of the board’s beneficiaries to Medi-Cal.

Historical Milestones of the Managed Risk Medical Insurance Board (by Dennis Gilliam, MRMIB) (pdf)

ABX1 21 Signed Into Law

The seven-member board administers four established programs and a pilot program that serve low-income and high health risk individuals. The programs provide coverage through private health plans to certain groups that don’t have health insurance. Many of these programs are expected to change dramatically when elements of the federal Patient Protection and Affordable Care Act become operational in 2014.

The Healthy Families Program (HFP) is the largest program administered by the board. It offers low-cost health, dental and vision coverage for children and teens up to age 19; it also provides coverage for children who do not have employer-sponsored insurance and do not qualify for no-cost Medi-Cal. The children of women enrolled in AIM are eligible for enrollment in the Healthy Families Program unless the child is already involved in employer-sponsored insurance or no-cost Medi-Cal.

The Pre-Existing Condition Insurance Plan (PCIP) is a federally-funded program operated by the state of California that provides medical coverage to those with pre-existing health conditions who cannot obtain health insurance or affordable coverage in the commercial market. The program, created in 2010 as part of President Obama’s health care reform, is available to people who have not had health coverage during the previous six months. It is scheduled to run until 2014, when the law will compel insurers to accept all applicants regardless of pre-existing conditions.

Very similar to PCIP—but state, instead of federally, funded—the Major Risk Medical Insurance Program (MRMIP) provides medical coverage to those with pre-existing health conditions who cannot obtain health insurance or affordable coverage in the commercial market. Those individuals who qualify for the program are required to pay a premium. However, when enrolling in MRMIP, it will prevent qualification for PCIP. PCIP and MRMIP have different eligibility criteria and PCIP is generally more affordable.

The Access for Infants and Mothers (AIM) program is low-cost health care coverage for pregnant women and their infants. The children born to women enrolled in AIM can also be covered by the Healthy Families Program. AIM is geared toward middle-income families without health insurance and whose income is considered too high for Medi-Cal. The program is also for women who have private health insurance plans with a maternity-only deductible or copayment greater than $500.

The County Children's Health Initiative Program (C-CHIP) created the Children's Health Initiative Matching (CHIM) Fund in the state Treasury, which is administered by the  board. It provides four counties (Alameda, Santa Clara, San Francisco and San Mateo) in a pilot program the ability to obtain federal funds for their Healthy Children’s initiatives by providing local matching funds. It provides help to uninsured children under the age of 19 who are not eligible for the Healthy Families Program or the no-cost Medi-Cal program, and whose household income falls within 251% to 300% of the federal poverty level.

Programs Operated by the Board (MRMIB website)

Children's Programs Slowly Moving Forward at MRMIB (by David Gorn, California Healthline)

The Managed Risk Medical Insurance Board administers five funds with total proposed expenditures in 2012-13 of $965.6 million, significantly less that the previous year’s $1.68 billion. The reduction mostly represents cuts in the Healthy Families Program, which the Brown administration wants to transition to Medi-Cal. The program would still be the largest administered by the board,  but its $1.19 billion budget would be cut to $444.6 million. Next largest is the Pre-Existing Conditions Plan ($320.7 million), Access for Infants & Mother ($127.1 million), Major Risk Medical Insurance Program ($43 million) and County Health Initiative Program ($2.2 million).

The state’s General Fund contribution to the board would decline from $288.6 million to $136.2 million and about $400 million in federal funds would disappear. 

Summary of Budget Appropriation (State Senate Subcommittee on Health and Human Services) (pdf)

3-Year Budget (pdf)

Open Letter of Protest

In May 2011, Governor Jerry Brown released a revision of his 2011-12 state budget proposal, which included a plan to eliminate various boards and agencies, including MRMIB. More than 900,000 children who receive coverage through the Healthy Families Program would be shifted to Medi-Cal and other programs would be moved to the Department of Health Care Services.

The board responded almost immediately by posting an open letter of defiance on its website. The five-page letter said, in part: “The proposal appears to be created in haste, would result in harmful disruptions to coverage for hundreds of thousands of children, contains uncertain cost savings assumptions, is a rush to judgment as to the future structure of California’s health care system and would result in a loss of transparency as well as public and stakeholder access.”

Board members acknowledged that many of the MRMIB programs would be transformed and absorbed into the federal Health Benefits Exchange scheduled to be rolled out in 2014 as part of President Barack Obama’s health care reform, but said they expected to play a key role as a bridge to the future. Instead, the board found itself on the verge of extinction. Board members requested that the administration at least delay action until significant issues could be resolved.

The County Welfare Directors Association of California (CWDA), whose members would be on the receiving end of Brown’s proposed shift of services from MRMIB to Medi-Cal, disagreed with the board, taking issue with a number of characterizations in the open letter “that paint such an inaccurate picture of county eligibility operations.”   

The association disputed the board assertion that Medi-Cal administrative costs are higher than the Healthy Families program, calling it an apples-and-oranges comparison because MRMIB piggybacks on substantial cost analysis work that Medi-Cal performs. The CWDA disagreed with the board’s claim that its centralized, automated “no wrong door” system was superior to Medi-Cal’s decentralized, diverse and, at times, befuddling bureaucracy. The association said it had a “no wrong door” system long before the MRMIB put one in place and touted its own online application system as superior. It denied that the MRMIB was quicker or more accurate than the counties. 

The proposal to eliminate the MRMIB and move its programs failed during budget negotiations.

May Revise Released: Tax Extensions Needed (by Anthony Wright, California Progress Report)

An Open Letter Regarding the 2011 May Revision (The Board) (pdf)

CWDA Response to the MRMIB Open Letter Dated May 16, 2011 (pdf)

Slow Segue to 2014

When President Obama’s health care reform takes effect in 2014, and the state’s Health Benefit Exchange is born, many of the programs run by the Managed Risk Medical Insurance Board will disappear. But as the board contemplates the transition, it is considering a possible overlap of some programs, like the Pre-Existing Condition Insurance Plan (PCIP). 

At a board meeting in October 2011, it was suggested that the plan could be continued for an extra year. “It might sit better to let the Exchange launch and get a good mix of enrollees in the first year before taking on the PCIP folks,” according to MRMIB Executive Director Janette Casillas.

Board member Richard Figueroa echoed that sentiment. “This population will migrate to the Exchange, and that's what we want,” Figueroa said. “But also, we do have some things to offer, in terms of what we've learned about running a transparent process, the single rules engine, and how to get people into these programs and keep them there.”

Casillas said that it might be a good idea to keep the high-cost, high-risk patients in programs where they currently receive care, but that it would only work if the federal government continued to foot all the expenses.

Enrollment in PCIP, mirrored in states across the nation, has been lower than lower than expected and prompted an announcement in June 2011 by the Obama administration that it would cut premiums for participants by as much as 40%. In California, that worked out to an average 18% premium reduction. But monthly premiums can still run as high as $652 because those in the program are among the most expensive to medically treat. As of October 2011, 5,000 people with pre-existing conditions had signed up for coverage in California although the program has the capacity to serve 25,000 individuals.

Falling Through the Cracks with a Pre-Existing Condition (by David Lazarus, Los Angeles Times)

Cost Drops for Patients with Pre-Existing Conditions (by David Gorn, California Healthline)

California Pre-Existing Condition Insurance Plan Hits 5,000 Enrollment Mark in One Year (MRMIB website) (pdf)

Pre-Existing Condition Health Plan Enrollment Still Well Below Capacity (California Healthline)

Extra Year of Operation for PCIP? (by David Gorn, California Healthline)

Basic Health Program

President Obama’s health care reform, scheduled to begin in earnest in 2014, will expand Medicare and provide health benefit exchanges where people can purchase insurance policies. But the law also allows states to create a Basic Health Program (BPH) that would provide even cheaper insurance for low-income families and immigrants. Such a program that would service adults with incomes between 133% and 200% of the federal poverty level and legal immigrants with incomes below 133% of the poverty level. Those eligible for the BHP could not participate in the Exchange.

The Affordable Care Act outlines the structure of the BHP, which requires it to be less costly to participants than coverage in the Exchange. In the Exchange, a participant’s payment level is 30% of the cost of the coverage. In the BHP, the participant pays as little as 10% of the cost of coverage. The federal government subsidizes 95% of the cost.

State Senate Bill 703, introduced in 2011, would create a BHP in the state of California. If passed, BHP could insure as many as 1 million low-income Californians for nearly one-fifth the price they’d pay in the California Health Benefit Exchange. In September, the Health Benefit Exchange board argued against the bill, which was then delayed for consideration until the following year.

Those influential in California’s health care system are divided as to whether or not it’s a good idea for the state. Some say it will make an already complicated system even more complex, while also getting in the way of the basic job function of the new Exchange.

Basic Health Plan in California? (Insure the Uninsured Project)

In Favor of the Basic Health Program

Supporters of SB 703 say it is a low-risk option for the state that will enable low-income Californians to receive health care at lower costs than coverage in the Exchange could offer. John Ramey, executive director of Local Health Plans of California, says the BHP would be much less expensive and provide better benefits. Medical providers would end up with lower reimbursement rates than under the Exchange. Current estimates predict that medical providers would get reimbursed at Medicare levels, which are much higher than Medi-Cal rate reimbursement. Ramey says the BHP will also provide lower costs to patients, enabling people to get coverage who otherwise wouldn’t be able to afford it through the Exchange. “In that way, it’s actually not poaching clients from the Exchange,” Ramey said. 

Branch McNeal of Mercer, a health care consulting firm that developed an actuarial model to investigate the feasibility of the BHP, agrees. Because of the many uncertainties plaguing the California health care market in 2014, McNeal was extremely conservative with Mercer’s model, but despite this fact the program still came across as not only appealing, but completely possible from a fiscal standpoint. “To the extent that it's prepaid and you can estimate what you're going to pay out, the risk is next to nothing,” McNeal said. “It appears to be pretty low-risk for California.”

Molina Healthcare, which has a history of serving low-income and underserved individuals, supports the program. Spokesman Bill O’Dell says the Exchanges would not be accommodating for low-income patients because they are not insurance savvy and are used to receiving care from community-based providers. Bringing them into a complex system that more closely matches the small group private sector will just complicate the Exchange’s mission.

O’Dell also rebutted arguments that creating a BHP would drain customers from the Exchange and reduce its bargaining power, pointing out that the Exchange would still have upwards of 1.5 million participants. And keeping the BHP clients separate would actually stablilize the Exchange by shielding it from fluctuating incomes of low-income patients.

With Basic Health Care Plan, California Can Lead in Health Care Reform (by John Ramey, Executive Director of Local Health Plans of California)

Bill to Extend Health Coverage to Low-Income Workers Delayed (by Karen Boruff, Sacramento Health Insurance Examiner)

Briefing—Exploring the Financial Feasibility of a Basic Health Program in California (California Healthcare Foundation)

Against the Basic Health Program

Opponents of the program say putting nearly 1 million people into the BHP who would otherwise enter the Exchange would “weaken the legitimacy of the Exchange.” Creation of the program could actually remove participants from the Exchange, negatively affecting the Exchange’s risk pool. Those who don’t support the passage of SB 703 argue  that California should take advantage of the implementation of the Affordable Care Act to simplify and streamline the number of operating health programs in the state. Adding a new program adds to the complexity and only further confuses individuals seeking affordable health care.

Micah Weinberg of the Bay Area Council believes the BHP would contribute to the “ridiculous, mind-bending complexity of our system.” Like other who oppose it, Weinberg also feels that the BHP would get in the way of the basic job of the Exchange.

”This new program creates two cut points, where you enter the BHP and when you exit the BHP. This is the creation of a new health care program, with an entirely separate set of contracts,” Weinberg said. “Not only would the Exchange lose out on the bargaining power inherent in nearly 1 million people, but having a separate program invites churning between the two entities.”

According to Weinberg, this is how decisions were made in the past; by defining a need for a narrow set of people and trying to pass it. “That's how we created this fragmented system in the first place. If we keep doing what we've been doing, we'll end up with what we have now.”

Exchange board member Susan Kennedy believes passage of SB 703 would have a direct impact on the Exchange. “I don't understand how the Health Benefit Exchange can negotiate and set rates, and then have another entity come in and undo it. I see two bites of the apple as detrimental to our job,” Kennedy said.

Kennedy also dislikes that the BHP could take between 800,000 and 1 million people away from the Exchange pool. “Taking 800,000 people away, it's disastrous for the Exchange, in my view,” Kennedy said. ”I would say, if it doesn't help the Exchange, I would oppose it.”

Plan to Expand Benefits Draws Opposition (by Joshua Emerson Smith, HealthyCal)

Basic Health Program: Good or Bad for California? (by David Gorn, California Healthline)

Public Agency Takes Up Political Hammer (by David Gorn, California Healthline)

Basic Health Plan's Future Unclear in California (by George Lauer, California Healthline)

Bill to Create Basic Health Program Delayed (by David Gorn, California Healthline)

State-Based Coverage Solutions: The California Health Benefit Exchange (by Micah Weinberg and Leif Wellington Haase, The Commonwealth Fund) (pdf)

John L. Geesman, 2000-2002

Tal Finney, 1999

Clifford Allenby, 1990