Assembly Subcommittee No. 1 Considers Health Coverage, AB 85 Budget Proposals

On Monday, the Assembly Budget Subcommittee No. 1 on Health and Human Service, led by Acting Chair Assembly member Eloise Gómez Reyes, heard several items related to health coverage affordability, expanding Medi-Cal coverage to undocumented adults and the proposed increased to the redirection of 1991 Health Realignment under AB 85 (Statutes of 2013). Highlights from the hearing are provided below:

Individual Mandate and Affordability. The Department of Finance (DOF) provided a high-level summary of the Governor’s January budget proposal to create a state-level individual mandate and additional affordability subsidies under Covered California. These subsidies would be solely be funded by penalties generated by the individual mandate. DOF noted that their proposals were modeled after the federal government. In addition, DOF indicated that though the federal individual mandate resulted in roughly $500 million for the federal mandate in 2016, that California would likely see a lower amount of revenue from the penalty given the higher federal filing threshold.

Legislators were skeptical around the details of the Administration’s proposal and raised questions around the variability in the subsidies year over year and the lack of additional General Fund investment into the subsidy program beyond penalty revenues. Assembly Member Wood was particularly concerned around the individual mandate not being tied to the sunsetting of the affordability subsidies. According to DOF, penalty revenues received after the sunsetting of the affordability subsidies would be deposited into the General Fund. Assembly Member Wood encouraged that the Administration consider those revenues continue to be earmarked for health care affordability.

A myriad of stakeholders including, but not limited to health advocates, hospitals, and health plans expressed support for a state-level individual mandate and affordability subsidies.

Medi-Cal Expansion to Undocumented Young Adults. Representatives from the California Immigrant Policy Center and Health Access expressed their appreciation and support for the Administration’s proposal to expand Medi-Cal to undocumented young adults ages 19-25 and further urged the Legislature build upon this proposal and support expanding coverage to all undocumented adults. The Department of Health Care Services (DHCS) affirmed the Governor’s support of health coverage for all and framed the proposal for young adults as an initial down payment. DHCS shared their estimates of $194 million in net General Fund costs to implement this proposal under the assumption that roughly 130,000 individuals would be enrolled in full-scope coverage. Lastly, the department noted their continued work to refine their estimates for the May Revision.

Again, a wide array of stakeholders, indicated a strong support of all proposals to expand coverage to undocumented adults. CHEAC expressed support of the proposals and indicated concerns with the financing mechanism.

Increased AB 85 Redirection. DOF briefly described the Administration’s proposals to increase the redirection of the CMSP Board and key counties from 60 percent to 75 percent in light of the Governor’s proposal to expand Medi-Cal to undocumented young adults. This increased redirection would result in $63 million in additional General Fund savings. DOF indicated the 34 CMSP counties would not be directly impacted, yet of the $63 million, roughly $14 million would be redirected from five non-CMSP counties.

The Legislative Analyst’s Office shared their perspective that some level of redirection may be appropriate, however did underscore concerns around both the impact to non-CMSP counties’ public health services and the continued viability of the CMSP Board.

Dr. Peter Beilenson, Director of the Sacramento County Department of Health Services, illustrated the impact that this proposal would have on the provision of public health services for all impacted non-CMSP counties and the provision of services to undocumented adults for counties currently doing so.  

DOF committed to continue discussions around the impacts to counties. As such, Assembly Member Reyes voiced concerns around the harm to impacted counties and noted there is “more work to do.”

CHEAC, CSAC, HOAC and others representing impacted counties and the CMSP Board expressed considerable concerns with this proposal.

All items were held open.

Hearing materials can be found here. A recording of the hearing can be found here.