Calif. saves CHIP coverage for 600,000

Moving money from one pot to another, the state of California managed to avoid eliminating dental coverage for some 600,000 low-income kids, newspapers reported.

Gov. Arnold Schwarzenegger and the state Legislature agreed to cut about $200 million from the state's Healthy Families service in July. The program provides dental, medical, and vision insurance for children whose families can't afford private insurance or qualify for Medicaid. The children would have started losing their benefits October 1.

On Thursday, the state Assembly passed a complicated bill that draws on federal stimulus funds, money set aside from a tobacco tax and increased copayments to make up the shortfall, the San Francisco Chronicle reported. Gov. Schwarzenegger reportedly agreed to sign the law.

The program receives funding through the federal Children's Health Insurance Program (CHIP), but only if the state complements those funds.

The largest portion of the money will come from a 2.35% tax on premiums paid to health insurers that serve Medicaid patients in the state. The insurers will get the money back from the federal government however, and also won't have to pay a 5.5% "quality improvement" fee that expires October 1, the San Jose Mercury News reported.

Premiums will increase by $4 to $7 for some participants, the Chronicle reported.

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