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Governor signs bill to keep Healthy Families kids insured

September 22, 2009 | 11:48 am

Adding a dash of good feeling to a year dominated by budgetary distress, Gov. Arnold Schwarzenegger this morning signed a measure that keeps nearly 700,000 children from being yanked off a government health insurance program.

The measure by Assembly Speaker Karen Bass (D-Los Angeles) allows the state’s Healthy Families program to reap $196 million and ensure coverage to children of families who wouldn’t otherwise have coverage.

“We were going through painful moments…Today we are turning all this around,” Schwarzenegger said during a ceremony in the Capitol rotunda. “It would have been disastrous to lose healthcare for all those kids.”

He called the scheme used to save the program “innovative,” with much of the money coming from a new 2.35% tax on health insurance companies that will be used to leverage nearly $100 million in federal matching funds.  Insurance companies will be largely reimbursed with federal money for the cost of the tax, which expires at the end of 2010.

In addition, the state’s First 5 early childhood development effort, the voter-approved program that is flush with cash from a special tobacco tax, has agreed to divert $81 million to help Healthy Families.

More than $15 million in additional funds would come from a shift in dental coverage and from higher premiums and co-payments for Healthy Families participants. The only unaffected participants would be the lowest-income enrollees, making less than $27,500 annually for a family of three.

During the signing ceremony, Schwarzenegger also announced that the state had won $42.7 million in federal stimulus money to help the homeless.

-- Eric Bailey in Sacramento