California launches legislative push to make insurance more affordable and accessible
Eduardo and Maria Contreras sit in the living room of their mobile home in San Juan Capistrano on Wednesday, March 20, 2019. The two make too much money for Medi-Cal, but what they earn is still not enough to purchase Covered California health plans because they don't qualify for subsidies under the Affordable Care Act.
(Photo by Mark Rightmire, Orange County Register/SCNG)
Eduardo Contreras thought he would finally see some financial security this year. For some time, his family had struggled on an income of about $50,000. Then Contreras got a new job as a cook at a winery, with better pay and more hours. In 2019, he and his wife, a hotel housekeeper, expect to clear $80,000. With an increase in family income of more than 50 percent, they looked forward to some relief from the pressure.
But then the 46-year-old Orange County resident took a look at his new monthly health insurance premium: $1,045, an increase of almost $700. That’s partly because his wife, who hasn’t been covered before, has been ill and needs insurance. They've been able to appeal to Covered California, the state’s insurance exchange for those without employer-sponsored coverage, to get the premium down to about $951 after a subsidy. So far they have been paying the monthly bill, but Contreras fears it may become unaffordable for his family.
Their two sons, ages 22 and 17, are covered separately through Medi-Cal, California’s Medicaid program.
Between rent, car payments, his older son's college costs and other expenses, Contreras said he has no idea how he'll pay the premiums every month. Neither he nor his wife has employer-provided health care plans. As legal residents, they are entitled to buy insurance through Covered California, but that doesn’t do them much good if they can’t continue to pay the premium.
"It feels like I'm caught in a vicious cycle," he said. "All your life you work hard to make more money. But when you make more money, that becomes a problem."
New legislation could help ease their situation.
There are 22 bills before the Legislature this year that aim to make health care more affordable and accessible. It seems almost certain that some of them will pass. But even though all the bills are heading in the same direction, there are competing visions of what a health care expansion should look like in 2019.
In January, Gov. Gavin Newsom unveiled his proposals, which are now embodied in various pieces of legislation. They include imposing an individual mandate that would penalize people for not carrying insurance; this would replace the federal mandate that was repealed when Congress enacted tax reform.
As proposed, the money generated by the penalty would be used to make insurance premiums more affordable for middle-income earners like the Contreras family. Newsom also wants to extend Medi-Cal coverage to immigrant adults under age 26 with very low incomes, but who are undocumented and thus not entitled to health insurance under the Affordable Care Act.
Meanwhile, some legislators have introduced bills with much more sweeping expansions. One major proposal contained in two bills this year would extent Medi-Cal eligibility to all undocumented adults whose incomes are low enough to qualify.
Noe Paramo, a legislative advocate with the California Rural Legal Assistance Foundation and a member of the Care4All California coalition, said making all Californians eligible for Medi-Cal, regardless of immigration status, will keep the state healthier in the long run. It would be a profound change for his clients, he said, especially farmworkers.
“Every day they go to work without health care, and any injury that happens to them, or just illness, they suffer a consequence,” he said. “We can do better as Californians. We need to support this.”
The concept of single-payer — one government health plan for all Californians — isn’t on the table, though Newsom has said numerous times he wants to move the state in that direction.
But everything has a price tag. And while Newsom is eager to improve health programs, Department of Finance spokesperson H.D. Palmer points out that the state has historically had to scale back ambitious health care agendas when funding evaporated, such as during the 2008 recession or the dot-com bust in 2000.
"The governor is mindful that we don’t want to get into kind of a yo-yo pattern between expanding programs and having to cut those back, which is why he’s been very careful in terms of expanding programs in health care in the ways that he has," Palmer said.
Not everyone is a fan of the state’s ambition to expand coverage. Sally Pipes, president of the conservative Pacific Research Institute in California, criticized the legislative effort.
"For me, it's very, very worrying," she said. "These moves are, in my mind, stepping stones to a government takeover of heath care."
Debate on the bills is expected to center on priorities — expanding coverage to the largest possible number of undocumented adults or making plans more affordable to the middle class, said Assemblyman Jim Wood, D-Santa Rosa, who chairs the Assembly Health Committee. Newsom’s vision has some of both, but hews more to helping the middle class, a vision embodied in a bill carried by Wood.
"In an ideal world, we shouldn't have to choose because both groups are struggling," he said. "In the end, it's going to come down to the will of the Legislature and the resources that are available."
Wood’s legislation, Assembly Bill 174, would establish a tax credit beginning in 2020 for individuals earning between 400 and 600 percent of the federal poverty level who buy insurance on the state’s Covered California exchange. Senate Bill 65, introduced by Sen. Richard Pan, D-Sacramento, also strives to make plans in the marketplace cheaper by putting limits on how much consumers have to contribute to their premiums and by subsidizing copayments and deductibles between 200 and 400 percent of the poverty level.
For a family of two, 400 percent of the federal poverty level amounts to a household income of $65,840, or $100,400 for a family of four. That means if a family of two makes more than $65,840, they won’t qualify for subsidies when they purchase a plan through Covered California.
With an income for two of $80,000, the Contrerases wouldn’t qualify for the subsidies under the proposed legislation — but they could get a significant tax break to help them with their insurance bills.
If proposals to help all undocumented adults prevail, but not those that would help the middle class, the family would be stuck with their higher new premiums.
But Teresa Nava’s life in Orange County would change for the better.
Nava, 51, who has been living in the country illegally since 1995, depends on low-cost clinics for most medical needs. She also has emergency Medi-Cal, which is limited to sudden or unexpected serious health issues that require immediate attention.
"For so many years, I've been going from clinic to clinic to take care of my health," Nava said. "If I could get Medi-Cal, that would be such a big relief for me."
Nava, a housekeeper, arrived from Mexico in 1995. Her four children are now 28, 20, 19 and 14. They have health insurance through Medi-Cal or their employers.
Daniel Zingale, the governor’s chief strategist, said that giving Nava her wish of full Medi-Cal coverage would be an expensive proposition.
"Covering all undocumented uninsured individuals is estimated to cost about $3 billion (annually)," he said. Given the need for fiscal prudence, he said, the governor's proposals are steps toward that goal.
California has about 3 million uninsured residents, a figure that includes those who have emergency Medi-Cal for limited uses, according to 2017 U.S. Census numbers and statistics provided by the UC Berkeley Labor Center. That number is down dramatically from the 17 percent who were uninsured in 2013. Much of this drop has been attributed to Medi-Cal expansion under the Affordable Care Act. About 13 million people are covered by the program for very low-income people.
There are a few ways in which the state can pay for expanding coverage, said Scott Graves, director of research for the nonpartisan California Budget and Policy Center. Policy makers could use revenue from the general fund without a tax increase, just as they did when they expanded Medi-Cal to undocumented children in 2016.
Or, they could go to revenue sources that generally rise over time, such as a personal income tax, a sales tax or a corporation tax. Revenue sources that decline over time, such as tobacco taxes, are less effective at funding ongoing costs, he said.
According to the Legislative Analyst's Office, the general fund can absorb about $3 billion in new ongoing spending before shortfalls arise. The budget the governor has proposed in January includes $2.7 billion in that category.
Both Zingale and Wood believe that even though forces seem aligned this year for meaningful health care legislation to pass, it's going to have to be done in baby steps.
Wood is not optimistic about single-payer health care in the near future.
“Until we have a federal administration willing to work with us, single-payer health care is impossible to accomplish," Wood said.
**
Here are the bills to watch in 2019 on health care affordability and access
By Sammy Caiola
Increasing Coverage
Introduced by Sen. Maria Elena Durazo (D-Los Angeles) / Asm. Rob Bonta (D-Oakland), David Chiu (D-San Francisco), Miguel Santiago (D-Los Angeles)
These bills would extend Medi-Cal eligibility to all income-eligible adults regardless of their immigration status. The state’s Legislative Analyst’s Office estimated last year that doing so would cost almost $3 billion. It would be a significant addition to the $20.7 billion in general fund money the state is expected to spend on Medi-Cal in the 2018-2019 fiscal year. Gov. Gavin Newsom has instead advocated for expanding eligibility only to undocumented people age 19 through 25 for an estimated $250 million. Undocumented children up to age 18 are already eligible.
Introduced by Asm. Cottie Petrie-Norris (D-Laguna Beach)
This bill would make it easier for eligible children and pregnant women in the federal Women, Infants, and Children program to enroll in Medi-Cal.
Introduced by Sen. Melissa Hurtado (D-Sanger)
This bill would require health plans to send notices to people who lose their coverage for any reason, and to inform them about Medi-Cal and Covered California. Plans must also provide a list of people who lost coverage to Covered California so the exchange can contact those who lost coverage directly. Hurtado says the bill will reduce coverage gaps when people’s income or other life circumstances change.
Asm. Rebecca Bauer-Kahan (D-Orinda)
This bill would extend the application period for Covered California by two weeks. Starting in 2018, most federally administered exchanges created under the Affordable Care Act shifted to a shortened enrollment period ending Dec. 15. In California, consumers have until Jan.15. This bill extends the deadline to Jan. 31.
Introduced by Asm. Petrie-Norris (D-Laguna Beach)
Federal waivers allow states to find new ways to improve health care in exchanges created under the Affordable Care Act. Last year, the Trump administration began allowing state exchanges to apply for waivers without explicit state legislative authority. Under the looser rules, health advocates are worried states will try to offer coverage that undermines the Affordable Care Act. Health Access and the Western Center on Law and Poverty are sponsoring the bill, which would prohibit Covered California from applying for a waiver without approval from the Legislature and the governor.
Making Insurance Cheaper
Introduced by Asm. Jim Wood (D-Santa Rosa) / Sen. Richard Pan (D-Sacramento)
These bills both would require Covered California to provide more financial help to low-income residents buying health insurance. Assembly Bill 174 would establish a tax credit beginning in 2020 for individuals who currently earn between 400 and 600 percent of the federal poverty level, or more than $48,000 a year for an individual and more than $100,000 a year for a family of four. These families are not currently eligible for Affordable Care Act tax credits. The Senate bill would require Covered California to implement premium contribution limits, while also reducing copayments and deductibles for people with incomes between 200 and 400 percent of the federal poverty level.
Introduced by Sen. Richard Pan (D-Sacramento) / Asm. Bonta (D-Oakland)
Both of these bills would establish an individual insurance mandate, including a state-level penalty for people who don’t carry health insurance. It would replace the federal fine that disappeared beginning this year. Covered California would determine the penalty and who would be exempt. Gov. Gavin Newsom wants to use revenue from the fine to fund subsidies in Covered California. He anticipates it will generate $500 million a year.
Introduced by Asm. Wood (D-Santa Rosa)
Currently, seniors who earn more than about $15,000 a year and are enrolled in the Medi-Cal Aged and Disabled program must pay a monthly out-of-pocket fee for medical services, even though most adults who earn up to roughly $17,000 a year have free Medi-Cal. This bill would reduce the number of seniors who have to pay the fee by raising the maximum income level for the Medi-Cal Aged and Disabled program to $17,000.
Introduced by Asm. Wendy Carrillo (D-Los Angeles)
Seniors in the Medi-Cal Aged & Disabled program are currently restricted to $2,000 in a bank account, or $3,000 for couples, because of something called the “assets test.” These types of restrictions were eliminated for most other Medi-Cal enrollees under the Affordable Care Act. Senior advocates say the rule requires seniors to deplete their assets in order to be eligible for health coverage, and that it disproportionately affects seniors of color. The bill would raise the limit to $10,000 for an individual, exclude certain items from the assets test, and eliminate the test for Medicare Savings Programs.
Introduced by Asm. Wood (D-Santa Rosa)
This bill affects seniors who are enrolled in both Medicare and Medi-Cal. These seniors sometimes lose their Medi-Cal coverage when the state begins paying their Medicare Part B premiums, because those payments bump them above the Medi-Cal income eligibility threshold. Wood’s bill would make it so the Medicare payment is not counted as income.
Combating Health Disparities
Introduced by Asm. Kansen Chu (D-San Jose)
This bill aims to improve translations in the Medi-Cal program. It would require the Department of Health Care Services and Medi-Cal managed care plans to review translated materials for Medi-Cal beneficiaries for accuracy, cultural appropriateness and readability.
Introduced by Sen. Holly Mitchell (D-Los Angeles)
The state’s health department is currently required to maintain a maternal and child health program, and the Office of Health Equity must track ethnic and racial health statistics on infant and maternal mortality, among other issues. This bill would require hospitals, birth centers and clinics that provide perinatal care to implement an implicit bias program for all providers, in an effort to reduce racial disparities. The providers would have to complete training at the outset, and a refresher course every two years. The bill would also change the way deaths of pregnant women are recorded on certificates.
Transparency
Introduced by Asm. Wood (D-Santa Rosa)
This bill would require California’s Department of Health Care Services to create a rating system for Medi-Cal managed care plans. Advocates say the state should be holding plans accountable for improving quality and reducing health disparities.
Introduced by Asm. Luz Rivas (D-Arleta)
This bill would require the Covered California board to make information on health plans’ cost reduction efforts, quality improvements and disparity reductions public. The board would have to post the data on its website annually in a way that “demonstrates the compliance and performance of a health plan, but protects the personal information of an enrollee.”
Introduced by Asm.Ash Kalra (D-San Jose)
Under current law, health plans offering individual or small group coverage must file information about total earned premiums and incurred claims with the California Department of Insurance or the Department of Managed Health Care at least 120 days before implementing a premium rate change. This bill would require plans offering large group coverage to do the same and would impose additional disclosure requirements.
Introduced by Sen. Pan (D-Sacramento)
This bill would remove an exclusion in state law that allows certain health systems, including Kaiser Permanente, to keep some insurance costs and hospital financial information private. Under the bill, Kaiser would be held to the same data disclosure requirements as its competitors.
Introduced by Asm.David Chiu (D-San Francisco)
This bill would limit what hospitals can charge a patient, or the patient’s plan, for emergency care in cases where the hospital does not have a contract with the patient’s health plan. It’s an effort to stop what advocates call “surprise billing”, or hospitals landing patients with large and unexpected costs after providing care.
Drug Access
Introduced by Asm. Monique Limón (D-Santa Barbara)
This bill would require most large group health plans to cover medically necessary prescription drugs.
Introduced by Asm. Wood (D-Santa Rosa)
Wood says brand name drug manufacturers sometimes enter into contracts with generic drug manufacturers, whereby the generic company delays marketing their version of a drug in exchange for payment. Wood’s bill would outlaw the practice.
Follow the USC Center for Health Journalism Collaborative series "Uncovered California" here.