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Shaking Things Up in California

California has been waiting and planning for the “big one” for a long time. I am not talking about the long-forecasted massive earthquake but the much-anticipated dream of publicly sponsored universal health care coverage. With the inauguration in January 2019 of Gavin Newsom as the governor of California, there is renewed optimism among single-payer advocates that something big is about to happen in the state. Gov Newsom advocated for universal coverage and promoted the idea of a single-payer system as a part of his campaign.

Image: Niyazz/Getty Images
A Long History

California has flirted with the idea of a publicly financed single-payer health care system dating back to 1945. A single-payer bill actually passed both chambers of the state legislature in 2006 but was subsequently vetoed by then-governor Arnold Schwarzenegger. As recently as last year, the state Senate passed a single-payer bill sponsored by the California Nurses Association, but it died in the Assembly. Opinion polls among Californians on whether they would support a single-payer health care system are sensitive to how the question is framed, but they suggest substantial support for the idea. Single-payer health care means different things to different people, but universal coverage and cost control for consumers are central features.

In his first day in office, Gov Newsom signed an executive order requesting permission and financial support from the federal government to enable California to establish a single-payer health care system. There have been no public reports of a federal response to this request, and considering the political differences between the Trump and Newsom administrations, it seems unlikely that there will be much movement on it anytime soon.

But just as smaller earthquakes can be a precursor of larger events to come, California’s governor has proposed several incremental measures entirely under state control that are intended to keep California on a path towards universal coverage. Of the states, California had the largest number of individuals who gained coverage following the passage of the Affordable Care Act (ACA). Its uninsured rate is currently estimated to be 7.2%, down from the 17% uninsured rate in 2013, the year before implementation of the ACA’s major insurance reforms. If Gov Newsom were able to make further inroads on reducing the number of uninsured in the state, this would be remarkable, given national trends in health insurance coverage. Recent estimates suggest that the Trump administration’s widespread sabotage of the ACA has resulted in an increase in the number of uninsured nationwide.

Replacing the Federal Mandate

To stabilize and expand coverage in California, Gov Newsom is proposing a state financial penalty tied to the individual mandate, which would replace the one that the federal government eliminated as of this year. Not only would this keep an incentive in place for individuals to retain coverage, but any state funds collected through this penalty would be converted into state subsidies to help individuals purchase coverage through California’s state insurance marketplace (Covered California). These state subsidies for coverage would be available not only to those eligible for federal subsidies (individuals with incomes between 138% and 400% of the federal poverty level) but also for those up to 600% of the federal poverty level. In 2015, Californians paid approximately $400 million in federal tax penalties related to the individual mandate.

Among the estimated 3 million Californians who lacked health insurance coverage in 2017, 400 000 were eligible but did not make use of federal subsidies to purchase coverage through Covered California. The presumption is that given the high cost of living in California, the amount of subsidy was insufficient to make purchasing health care coverage affordable for these individuals. Applying $400 million in tax penalties related to an individual mandate could provide $1000 per person on average to subsidize coverage for these individuals. There were also 270 000 Californians in 2017 with incomes between 400% and 600% of the federal poverty level who were eligible to purchase coverage through Covered California who might be more willing to do so with the assistance of a state subsidy.

Expanding California’s Medicaid

In addition to making health care coverage more affordable for those eligible to purchase it through Covered California, Gov Newsom has proposed expanding the state’s Medicaid program (Medi-Cal) to all income-eligible undocumented adults ages 19 to 25 years. California already makes Medi-Cal available to all income-eligible undocumented children through age 18 years. In the case of undocumented children, California uses state funds without a federal match to cover the costs, and the same would be true for the estimated 138 000 undocumented adults who would gain Medi-Cal under this proposal. California and the federal government are already required to provide this population with emergency Medi-Cal services. Gov Newsom’s proposal is for the state to cover the additional amount needed ($134 million, about $1000 per person) to provide these undocumented adults with primary care and other preventive care services, which would be expected to contribute to additional net savings by reducing preventable hospitalizations and emergency department visits.

To become reality, Gov Newsom will need the California Assembly and Senate to pass legislation that he can sign into law. The odds are in his favor because a supermajority of Democrats in both chambers precludes his need for any Republican support. Furthermore, during in the last session, each chamber passed bills to create state-supported subsidies to purchase coverage and to expand Medi-Cal to undocumented adults. These bills failed when the prior governor, Jerry Brown, refused to sign them.

If this legislation does pass, California can anticipate having nearly 95% of its population covered with health insurance. The question is whether these and other incremental steps California could take to move closer to 100% coverage will relieve or enhance political pressure for a publicly financed single-payer system. I suspect that even with success in expanding coverage, public support will continue to grow for publicly sponsored universal health care coverage, because even those who are insured are finding that they are at risk for increased amounts of out-of-pocket spending. Therefore, the question might be not if the health care “big one” will hit California (and perhaps other states), but when.

About the author: Andrew Bindman, MD, is professor of medicine and epidemiology & biostatistics based within the Philip R. Lee Institute for Health Policy Studies at the University of California, San Francisco (UCSF). He is a former Director of the Agency for Healthcare Research and Quality and a member of the National Academy of Medicine. (Image: Ted Grudzinski/AMA)
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