Hundreds of thousands and maybe more than a million people in California will have an easier time getting health insurance next year, thanks to a package of reforms that could be a model for other states and eventually the federal government as well.
Under a new budget agreement that Democratic Gov. Gavin Newsom and his allies in the state legislature reached over the weekend, California in 2020 will begin offering state-funded health insurance to undocumented young adults, reintroduce the “individual mandate” penalty for people who don’t have insurance, and offer more financial assistance to people buying coverage on their own.
The agreement still needs approval from the full legislature and a signature from Newsom. But despite a few pending issues in non-health parts of the budget, enactment appears to be all but certain, according to advocates and analysts who have followed the debate closely.
The new health care reforms aren’t supposed to be a substitute for “Medicare for All” or some of the other ambitious health plans that have captivated and energized progressives around the country. Newsom has previously endorsed the creation of such a single, government-run insurance program and the new budget agreement establishes a commission to figure out how such a proposal would work in California.
But that is looking more and more a long-term project, especially given that California has been talking about single-payer for years (decades, actually) and the necessary political support for it remains elusive. In the meantime, the new budget agreement will help significant numbers of Californians who are either struggling with high premiums or who have no insurance at all, helping California to realize the full potential of the Affordable Care Act while moving the state closer to universal coverage.
“California is showing the way to do both,” Anthony Wright, executive director of the California consumer advocacy group Health Access, told HuffPost. “You can have a vision for how you plan and think deliberately about getting to universal coverage, but that doesn’t have to get in the way of taking concrete, significant steps to provide health care now.”
Newsom, who became governor this year, has said he wants California to be a progressive trailblazer. This budget, which also includes bursts of new spending on early childhood programs and new tax breaks for the working poor, represents just the kind of action that Democrats in other states or in Washington, D.C., could take quickly, if and when they get control of government.
Of course, California has a large budget surplus, thanks to a booming economy and years of thrifty fiscal management. It also has large Democratic majorities in each house of the legislature. In other parts of the country and in Washington, it would be harder to find the money and political will to shore up Obamacare, to say nothing of spending taxpayer dollars on undocumented immigrants.
Filling One Of Obamacare’s Biggest Holes
California has a long record of using government to help people get health care.
State officials have implemented the Affordable Care Act enthusiastically, using the program’s funds to expand Medicaid. They have also set up a dedicated state marketplace, where people buying coverage on their own can shop for policies and get federal financial assistance. The managers of the marketplace, known as Covered California, have special regulatory authority to negotiate aggressively with insurers over prices and benefit structure.
Thanks in no small part to those decisions, the number of people without insurance dropped dramatically after the law took full effect and the marketplace has remained relatively stable, with nearly a dozen insurers offering coverage and premiums rising moderately from year to year.
But even with California officials trying so hard to make the Affordable Care Act work, lots of people have struggled with the cost of insurance. Among them are residents who make just a little too much income to qualify for the law’s financial assistance ― that is, anybody making more than four times the poverty line, which today works out to about $50,000 a year for an individual and $103,000 for a family of four.
Because these people get no assistance, they pay full premiums. That has been particularly tough on some older Californians, because by law insurers can still charge them up to three times as much as they charge younger people, leaving them with a choice of scraping up money for insurance they can’t really afford or taking their chances with no coverage at all.
California’s new budget agreement addresses this “affordability” problem primarily in two ways. First, it offers additional state assistance to some of the people who are already eligible for federal subsidies. Second, the agreement pushes the income threshold for assistance all the way up to six times the poverty line. That works out to about $75,000 for an individual and $155,000 for a family of four.
Under an earlier version of the proposal, the average monthly savings would have been around $10 at lower incomes and $100 at higher incomes, according to official estimates. For the small group of consumers facing the biggest sticker shock today, the savings would have been much bigger, literally hundreds of dollars a month.
The final budget agreement has more money going toward financial assistance, thanks in part to lobbying from groups like Health Access. That means the savings should be bigger too, although official estimates aren’t available yet.
Peter Lee, executive director of Covered California, described the package as a “way to show you can build on the Affordable Care Act and not just stand still in the face of gridlock and intransigence. … These are changes that are immediate and will be felt.”
Funding for the initiative, which the budget authorizes for three years at a cost of about $1.5 billion, will come primarily from penalties that people without insurance will pay. This is basically a return of the individual mandate that President Donald Trump and congressional Republicans zeroed out as part of the 2017 tax cut legislation.
To Republicans in California, the new mandate and the effort to prop up the Affordable Care Act more generally make no sense. “We’re putting gum and MacGyvering Band-Aids on this system,” Andreas Borgeas, a Republican state senator, said in March. “It needs to be redone and reviewed top to bottom.”
But although the restoration of the mandate might not be popular, and although its actual impact on policy isn’t entirely clear, the combination of more assistance and a restored penalty will likely lead more healthy people to buy insurance ― which, in turn, should allow insurers to hold down premiums.
Based on previous projections, the number of newly insured Californians plus those getting new state assistance could easily exceed 1 million, according to several analysts that HuffPost contacted.
Extending Coverage To Undocumented Young Adults
The other big health care initiative in the budget is the one that’s already generating headlines: It’s the extension of coverage to some undocumented residents.
The change is not as dramatic as it sounds. California opened up its version of Medicaid, known as Medi-Cal, to younger low-income undocumented residents back in 2016. The new agreement merely raises the cutoff age from 18 to 26. Estimates suggest about 90,000 people will sign up for the program as a result.
Some California Democrats wanted to go farther and open up Medi-Cal to undocumented residents of all ages. They cited, among other things, evidence that undocumented workers, who make up about 10 percent of the workforce, were less likely to get regular care ― and that, especially in the case of families, the inability of parents to get insurance meant that kids were going without coverage as well.
The legislature balked at that but advocates for immigrants and more health care access have said they will keep pushing, just as they intend to keep pushing for other reforms ― including, for example, regulating the prices of hospitals.
“For California’s immigrant communities, today’s budget deal is bittersweet,” Cynthia Buiza, executive director of the California Immigrant Policy Center, said in a statement. Although she praised the new coverage for young adults, Buiza added that “The exclusion of undocumented elders from the same health care their U.S. citizen neighbors are eligible for means beloved community members will suffer and die from treatable conditions.”
Outside of California, the politics of covering undocumented residents looks a little different, even though the human impact of uninsurance on these communities doesn’t depend on geography.
The last time subsidizing health care for undocumented residents got attention in national politics was in 2009, during the debate over what became the Affordable Care Act, when some Republicans insisted, wrongly, the bill would pay to cover undocumented residents. A Republican U.S. House member famously shouted “You lie!” in the middle of a joint address to Congress that then-President Barack Obama was delivering.
Now the issue is getting some attention again, because the Medicare for All proposal from Sen. Bernie Sanders (I-Vt.), which multiple Democratic candidates have endorsed, allows for coverage of all residents (although the bill isn’t as specific as a previous version and appears to leave the federal government discretion over how to define “resident.”)
Earlier this year, one of those co-sponsors and presidential candidates, Sen. Kamala Harris (D-Ca.), answered a question about coverage of undocumented residents by saying she would oppose any effort to “deny in our country any human being from access to public safety, public education, or public health, period.”
The statement drew widespread criticism from conservatives like Fox News host Tucker Carlson, who blasted Democrats for “paying the health care bills of foreign nationals who have no right to be here in the first place.”
The topic is likely to come up again and, when it does, Republicans are sure to cite California’s decision as indicative of what Democrats want to do in the rest of the country.
A Blue-Red Divide On Health Care
For now, though, the main political divide on health care is between those who want government to do more to help people get health care and those who want government to do less.
The latter includes Trump and officials in his administration, who have undermined the Affordable Care Act by cutting outreach funds and weakening its insurance rules. It also includes Republican officials in states like Kansas, Kentucky, and Tennessee, who have tried, with various degrees of success, to shrink Medicaid and to undermine the Affordable Care Act’s protections for people with pre-existing conditions.
But other states have different ideas. Although California’s Democrats are breaking ground by passing laws that add substantial new financial assistance and cover (some) undocumented adults through Medicaid, their counterparts in more liberal states like Maryland, New Mexico and Washington are enacting state-level versions of the regulations that the Trump administration has taken away and contemplating or other initiatives, like automatic insurance enrollment, that are likely to improve access to care.
All of this is taking place against the backdrop of a presidential campaign in which the top Democratic candidates support more ambitious schemes, including Medicare for All, that would get the U.S. to universal coverage or at least awfully close while addressing other problems, like the difficulty of dealing with private insurers, that narrower reforms cannot.
Enacting these would be difficult, as even the fiercest proponents of these schemes understand. One potential benefit of the incremental reforms Newsom and his allies are about to pass in California is that they could build credibility with the voters, making those bigger changes more achievable in the future. Another advantage is that they could provide assistance to people who need it ― and can’t afford to wait.
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