AM Alert: Blue pencil blues
The deed may be done on signing the "good, bad and ugly" budget revision package, but the fallout over the steep cuts is just beginning.

Gov. Arnold Schwarzenegger used his blue pencil veto authority to trim the programs after legislators sent him a package that fell $156 million short of his planned reserve. One program slashed to a sliver of its former self? Healthy Families, which provides low-cost coverage to children and teens whose families don't qualify for Medi-Cal.

An additional $50 million was penciled out of the program's budget, bringing its total shortfall to $194 millon -- a figure that amounts to more than half its state funding.

The program already froze enrollment earlier this month, quickly amassing a waiting list of some 22,000 kids in need of health care, and swapped its application payment assistance program for $4.6 million in savings. Now, to cope with the cuts, it's expecting to disenroll hundreds of thousands of participants starting later this fall.

The Managed Risk Medical Insurance Board, which runs the program, will come together Thursday to work out how exactly the cuts will be made. But MRMIB Deputy Director for Health Policy Legislation Ginny Puddefoot said they expect to begin rolling back coverage in the coming weeks.

"It's hard to quantify the number of children, based on shortfall that currently exists the most likely scenario would be to notify the first wave in August," Puddefoot said.

No talk of preserving a safety net for the neediest here. Disenrollment will be based on when participants entered the program. Children who hit their one-year coverage anniversary will not be eligible to renew their enrollment, and will instead be moved to that growing waiting list.

"At this point, it is strictly based on eligibility renewal dates," Puddefoot said. "Those children who were enrolled in July or August, and those children who were first enrolled in September will be the first to be disenrolled.

Children's and healthcare advocates estimated that nearly a million kids will be denied coverage through the enrollment freeze and disenrollments combined.They called the cuts "inexplicable," "cruel" and "foolhardy" and worried about the lasting effect losing coverage for kids could have on educational development, emergency rooms and the economic pinch already being felt by families across the state.

"This is when the need is at its greatest for kids of have access to health insurance as more and more families are losing their insurance," said Ted Lempert, President of Children Now. "An additional hit to Healthy Families is, quite frankly, a shameful act and certainly not how any struggling families would act toward their own kids."

Puddefoot and others expressed hope that the First 5 California could step in to fill some of the shortfall. The group, which gave $16.7 million late last year to prevent 65,000 children from being shifted to a wait list, has pledged to provide some financial support in wake of the cuts. But a dollar amount has yet to be announced, and funding from the commission would only impact infants through 5 year olds.

Similar reactions are being felt across the board, with some lawmakers questioning the legality of the cuts. Schwarzenegger's signatures are on the bills, but the writing's on the wall: this battle's far from done.