Health Policy & Legislative Lowdown: Can California move closer to universal coverage by lowering costs and expanding access to coverage?

by Robby Franceschini

February 22, 2019 – With national calls for “Medicare for All” and “Medicare for Some” and breakdowns of what single payer is (and what it isn’t), the ins and outs of health policy and government’s potential role in providing health coverage have captured America’s attention. Californians are equally engaged in the health reform debate since Governor Newsom promoted single-payer healthcare during his 2018 campaign. However, at the same time Newsom hedged on California’s potential adoption of single- payer system, saying noting it would take “years” to implement and that it involves “a lot of mythology.”

To establish a single-payer system California faces significant federal obstacles, including obtaining a CMS waiver to reallocate Medicaid funds and an ERISA exemption to regulate the large group employer market. Given the significance of these barriers, to move healthcare reform forward in California state lawmakers are instead introducing legislation to lower the cost of commercial coverage and expand public coverage, building upon the Affordable Care Act’s aim of universal coverage.

Shoring up the individual market

On February 12, representatives of the UC Berkeley Labor Center and Covered California testified at a joint hearing on health insurance affordability in California. Covered California recently saw a 24% drop in enrollment in individual market plans, with the highest drops in Bronze plan enrollees and unsubsidized enrollees. While more research is necessary to determine Californians’ motivations behind dropping coverage, experts noted that the likely reasons were the lack of the federal individual mandate and the premium spike that occurred due to the Trump administration’s withholding of cost-sharing reductions for premium support. Legislators from both parties appeared receptive to providing state assistance for insurance premiums.

Several legislative fixes to address these factors impacting individual coverage are in the pipeline. SB 175, introduced by Dr. Richard Pan (D-06), would institute a state individual mandate with the goal of alleviating losses suffered by the individual market and continuous premium rises. To remedy California’s loss of cost-sharing reductions Assemblymember Jim Wood (D-02) introduced AB 174, introduced by, which would provide state-administered advanced premium tax credits (APTCs) of between 8% and an unspecified amount of the cost of the second lowest of Covered California’s Bronze plan offering.

Expanding Medi-Cal to undocumented individuals between 19 and 26

Two days later, on February 14, the Senate Budget Committee held a hearing on Prescription Drug Affordability and Medi-Cal Coverage. (Prescription Drug Affordability will be covered in future issue of Health Policy & Legislative Lowdown.) Much of the hearing centered on Governor Newsom’s proposal to expand Medi-Cal coverage to the nearly 1.15 million uninsured, undocumented young adults aged 19 to 26. The cost to expand coverage to this population would be an additional $194 million in general spending. Covering this relatively young and healthy group makes sense because this population will age out of Healthy Families coverage by age 21, are less likely to have employer-sponsored insurance, and generally are not eligible for subsidies due on immigration status. Currently these individuals only have restricted-scope Medi-Cal access for pregnancy-related and emergency services benefits.

AB-4, introduced by Assemblymember Joaquin Arambula (D-31), would expand full scope Medi-Cal to all Californians regardless of immigration status. However, California’s healthcare workforce shortage was brought up in relation to the bill because the shortage impact may only get worse with expanded coverage. Senator Richard Moorlach (R-37), a former board member of Cal Optima (the Medi-Cal managed care plan for Orange County), also noted that many California providers already do not take Medi-Cal enrollees because of program’s low reimbursement rates.

Universal coverage versus single-payer

Mandating that individuals carry health insurance, subsidizing the cost of commercial coverage, and expanding access to Medi-Cal all point towards the immediate policy objective of achieving universal coverage in California. Covering more California residents may make strategic sense in the near-term while policymakers try to mitigate emergency department use over primary care and improve consumer health literacy regarding the state’s health insurance programs. However, the biggest factor influencing legislators’ focus on universal coverage rather than a single-payer system may be the price tag: for California, single payer could cost $400 billion.