SACRAMENTO – When Gov. Gavin Newsom took office four years ago, the Democrat went after Republicans on the national stage as they tried to gut the Affordable Care Act. Key to his ambitious health care agenda: Reinstate fines for Californians who have no coverage health, which had been eliminated at the federal level.
It was a tough sell for a new governor, and Newsom needed strong allies among state Democratic leaders, who at the time, in 2019, expressed concern about a new tax being levied on Californians who can’t afford the hike. of health care costs. Democrats, who then and now controlled the state legislature, finally backed Newsom in exchange for a promise: the state would impose the fine but use that money to provide financial assistance to offset out-of-pocket costs for Californians buying the state health insurance, Covered California.
But Newsom, now in his second term, has since reneged on that promise. His administration is withholding revenue raised by so-called individual mandates, the requirement that people have health care coverage or pay a fine. And his proposed budget for the next fiscal year starting July 1, which is under discussion in the state legislature, funnels the money into the state’s general fund.
This infuriates fellow Democrats who accuse him of breaking a promise and ignoring the millions of Californians who can’t afford deductibles and copays.
California began fining the uninsured in 2020, raising an estimated $1.1 billion in the first three years — and the Newsom administration expects it to bring in more than $700 million more in the next two years, bringing the projected total for five years to $1.8 billion, according to the state Department of Finance. Democratic leaders said Newsom’s tactic of withholding money for the general fund was a “rip off.”
“The money from the mandate should stay in health care,” Senate Speaker Acting Toni Atkins told KFF Health News, arguing that the state should distribute money now to help people afford health care coverage. “I don’t know what we are waiting for. We have to find a way to make health care more affordable and there is no question that the cost of health insurance is a barrier.”
Democratic lawmakers are expected to continue to ramp up pressure on Newsom in hopes of reaching an agreement by a June 15 deadline to pass a budget bill. “We’ve always thought the money was intended to reduce insurance costs,” said Phil Ting, a Democratic Assemblyman who chaired the Budget Committee.
Newsom puzzled over individual mandate in 2019 amid concerns about rising insurance premiums, promising to reduce health care costs of covered California consumers, distinguishing himself from then-President Donald Trump, who was attacking the insurance mandate how unfair. Republicans in Congress had gutted the federal penalty — part of the Affordable Care Act — in 2017. Newsom argued it would still work in California to reduce health care costs and help it reach its goal of universal health care — the centerpiece of its ambitious health care agenda.
Newsom now argues that federal health insurance subsidies that offset the cost of monthly premiums are sufficient. And, faced with a projected $32 billion state budget deficit, Newsom says California can’t afford to spend the money and cut out-of-pocket costs further. He argues that spending the money to cut deductibles, for example, would be “unsustainable.” His proposed budget would instead keep money for the state’s general fund, to be used on whatever California wants to spend.
But health care advocates who have lobbied for the fine, as well as many Democratic lawmakers, say the funds could save lives and should be distributed now.
“The individual mandate was not intended to create funds for other government programs outside of health care,” said Jim Wood, Democratic Assemblyman, of Santa Rosa, chairman of the Assembly Health Committee, in a statement. a heated budget hearing this spring. “The clear intent of the legislator was for this money to go towards accessibility.”
Wood said he could have rejected Newsom’s plan had he known the revenue generated would be deposited directly into the general fund. “I don’t think I would have supported it,” he told her. “It just feels like a violation of what we thought we were doing.”
Soaring out-of-pocket healthcare costs, such as for insurance premiums and deductibles, are driving people to forgo healthcare. In California, a staggering 52 percent of residents report skipping or delaying treatment in the past year for financial reasons, according to a recent survey by the nonprofit California Health Care Foundation. (California Healthline is an independent editorial service of the California Health Care Foundation.)
Diana Douglas, a lobbyist for Health Access California who was part of the coalition that supported the state’s coverage mandate in 2019, said Newsom must recognize the rising costs and spend the money now on economic assistance. “This penalty should be used to help Californians afford coverage and assistance.”
The health insurance plans offered by Covered California keep getting more expensive. Deductibles for a midrange insurance plan, for example, will jump to $5,400 next year, according to Covered California, from $4,750 this year and just $3,700 two years ago.
And many Californians who are buying coverage are also putting off treatment in the face of high costs. A survey conducted by Covered California in 2022 found that 48% of its consumers delayed important medical care due to costs.
Newsom unveiled its revised budget on Friday, May 12, 2023 in Sacramento. The governor argues that federal subsidies are sufficient to keep the cost of premiums in Covered California, the state grant.Rich Pedroncelli for KFF Health NewsNewsom this spring dodged a question from KFF Health News about the criticism he’s facing over his drive to keep the mandate money, simply saying he’s “proud” to have established the state coverage mandate and noting that federal subsidies for premiums are available to Californians who purchase coverage through California Covered. His administration defended the push to funnel money into the general fund, saying the revenue would be repaid to a special health fund and eventually be available for health care if the federal government cut existing subsidies for children. awards. Administration officials say Newsom is essentially borrowing the money and says he will be repaid later, though lawmakers have expressed concern he will never deliver on that promise.
Critics and some Democratic lawmakers say withholding the money is a double whammy for low- and middle-income residents who are struggling to pay for coverage and argue it amounts to a tax on the poor. “We seem to be trying to bail it out on the backs of our low-income communities,” said Democratic state Senator Caroline Menjivar, representing the state’s San Fernando Valley.
Democratic lawmakers this year are backing an alternative proposal, backed by Health Access California, to spend revenue from fines to uninsured residents to boost health insurance benefits for low- and middle-income people. They’d do well with a deal backers secured with state Democratic lawmakers last year to reduce or eliminate out-of-pocket costs in Covered California and eliminate deductibles entirely for a mid-level plan.
“We have to make sure that people not only have health coverage, but that they can afford to actually use it,” said Ronald Coleman Baeza, a health care lobbyist with the California Pan-Ethnic Health Network.
Although Newsom and his Democratic allies have approved major expansions in coverage, the state lacks universal health care. Experts say more than 2.5 million Californians remain uninsured, including unauthorized immigrants who earn too much to qualify for Medi-Cal, and lawmakers are increasingly agitated by the fact that not all residents who are insured can afford to use their cover.
“There was a clear commitment that these dollars would be used to reduce health care costs, and we didn’t,” said Assemblywoman Pilar Schiavo, a Democrat representing the Santa Clarita Valley, who said introduced a bill that would require that any revenue from the individual mandate be earmarked permanently for health care. Although he died this year, he may be revived next year and supporters say they will continue to pressure Newsom to distribute the existing cash to consumers in covered California.
“We have to keep our promises,” Schiavo said. “If you have insurance that you can’t afford to use, or you’re afraid to go to the doctor because of how high that bill might be, then you really don’t have access or universal coverage.”
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