(From the L.A. Times) Reporting from Sacramento – Federal health officials are casting doubt on a last-gasp funding scheme by California to keep nearly 700,000 children from being yanked from its government health insurance program for the working poor.

U.S. health officials say the plan adopted by the state during the final days of the legislative session in September and signed into law by Gov. Arnold Schwarzenegger may not meet regulatory muster.

As a result, children’s health advocates are warning that by the end of next year, hundreds of thousands of poor youngsters could lose their coverage — even as the Obama administration continues its push for universal healthcare.

“This would have devastating consequences,” said Wendy Lazarus of the Children’s Partnership. “I really can’t believe the Obama administration wants something like this to happen at the time they’re trying to make healthcare more stable for all Americans, particularly the kids.”

Read more here: U.S. questions Calif.’s healthcare plan for children of working poor