SACRAMENTO — Gov. Gavin Newsom’s first act as governor Monday was to propose state-funded health coverage for 138,000 young people in the country illegally and a reinstatement of a mandate that everyone buy insurance or face fines.
Newsom also proposed giving subsidies to middle-class families that make too much to qualify them under former President Barack Obama’s health care law. He signed an order giving the state more bargaining power in negotiating prescription drug prices. And he sent a letter to President Donald Trump and congressional leaders seeking more authority over federal health care dollars and policies.
“When everybody is pooled together it means lower cost for each and every one of you,” Newsom said in a video broadcast on Facebook as he signed his orders. “The spirit of this is about bringing down costs.”
Newsom was elected following a campaign that leaned heavily on his promise to provide health coverage to everyone. His actions hours after he took the oath of office take a step in that direction but the $760 million price tag will require approval from the Democratically controlled Legislature.
His letter to Republicans in Washington shows the uphill battle he’ll face to meet his goal of enacting a “single payer” health care plan that would combine state and federal health care dollars with new taxes to provide publicly funded insurance to everyone in the state.
A Top Priority for Many in Newsom’s Liberal Base
The idea is a top priority for many in Newsom’s liberal base but has been stymied by the staggering cost — a prior proposal was pegged at $400 billion — and the need for waivers from federal laws.
His proposals to cover immigrants and expand subsidies were a preview of his budget to be released later this week. They mirror ideas pushed last year by Democrats in the Assembly, who were unable to convince former Gov. Jerry Brown to embrace them.
“Gov. Newsom is right to make access to quality, affordable health care a priority,” Assembly Speaker Anthony Rendon, a Democrat from the Los Angeles area, said in a statement.
California has a projected surplus of $15 billion.
The proposals show Newsom is serious about health reform, but they need scrutiny to fully understand the consequences, said Assemblyman Chad Mayes of Yucca Valley, the top Republican on the Assembly Health Committee.
“Government has an important role to play in holding the health care industry accountable,” Mayes said. “However, it must be balanced and not overreach or hinder innovation.”
Providing Financial Assistance for Individuals
The Affordable Care Act required everyone in the country to buy insurance or pay a penalty, a controversial policy meant to ensure that the insurance pool has a mix of healthy and sick people. The penalty was zeroed out in 2017 by the Republican Congress and President Donald Trump. Insurance companies, concerned that only people with expensive health problems would buy coverage, responded by raising premiums for people who buy their own coverage without going through an employer.
California would join Massachusetts, New Jersey and Vermont as states with their own insurance mandates.
Obama’s health law also created subsidies to help people buy coverage if they don’t get it from an employer or a government program such as Medicare or Medicaid. Newsom would use $500 million in state money to make the subsidies larger for 1.1 million families that already get them and provide new assistance to about 250,000 people who make too much.
Newsom’s plan would provide financial assistance for individuals who make up to about $73,000 a year and families of four making up to $150,000.
California’s Uninsured Rate Has Dropped
California’s uninsured rate has dropped to just over 7 percent. Many of those who still lack coverage are ineligible for publicly funded programs, such as Medi-Cal and private insurance subsidies, because they’re living in the country illegally.
Medi-Cal, the state’s version of Medicaid, is jointly funded by the state and federal government and provides coverage to one in three Californians.
California uses state money to extend Medi-Cal coverage to people living in the country illegally up to age 19. Newsom proposes pushing back the cutoff to age 26, covering an additional 138,000 people at a cost of about $260 million a year, according to Newsom’s spokesman, Nathan Click.
Newsom signed an executive order directing state agencies to move toward purchasing drugs in bulk for all of the 13 million people on Medi-Cal. Purchasing for all but 2 million people is currently handled by the private insurers that serve as managed care organizations. Newsom hopes bulk purchasing drugs will give the state enormous bargaining power to negotiate lower prices.
His order directs state agencies to explore letting others, including employers and private insurers — join the state’s purchasing pool.