Joint Assembly and Senate Hearing Considers Options for Funding Health Insurance Affordability Assistance

On Monday, a joint Assembly Health, Assembly Budget Subcommittee #1, Senate Health, and Senate Budget Subcommittee #3 hearing, chaired respectively by Assembly Member Wood, Assembly Member Arambula, and Senator Pan, convened to explore health insurance affordability challenges in the individual market. Dr. Wood, in his opening remarks, commented on the great success California has had in implementing the Affordable Care Act while also likening recent federal changes to the ACA as sabotage.

The first panel featured Laurel Lucia, Health Care Program Director for the UC Berkeley Labor Center, who walked committee members through the findings from a report the Labor Center prepared last year and noted the following issues impact affordability in California:

  • Affordability concerns serve as a barrier to individual market enrollment and renewal of coverage
  • High out-of-pocket costs can be a barrier to care, cause financial problems, and may dissuade enrollment
  • The high cost of living in California and broader financial insecurity may aggravate health insurance affordability concerns for some
  • Some citizens and lawfully present immigrants lack access to coverage that meets ACA affordability standards

The second panel featured Covered California’s Executive Director, Peter Lee, who outlined the affordability options Covered California (described in last week’s update) developed for providing financial assistance to low- and middle-income Californians to access individual health care coverage through the Exchange including premium subsidies, cost-sharing subsidies, California specific individual mandate, and reinsurance. Representatives from the Department of Finance discussed Governor Newsom’s proposal to establish an individual mandate, along with a financial penalty, and then use the individual mandate-imposed penalties to provide state subsidies to reduce the cost of individual market coverage.

Rounding out the hearing, Covered California and the Legislative Analyst’s Office discussed implementation options for the Legislature to consider based on both revenues and budgetary funding options. Both Covered California and the LAO agreed that the individual mandate would have the most dramatic impact on influencing individual market enrollment; however, the LAO stated that individual mandate financial penalties would fall on people who likely had not purchased health insurance coverage due to affordability issues. Dr. Arambula, noting some of the affordability tradeoffs, discussed potentially convening stakeholders prior to the May Revision to discuss appropriate incentives for health care consumers. Other affordability funding options discussed included the renewal of the Managed Care Organization (MCO) tax, a tax on sugar sweetened beverages, state general fund expenditures, or savings realized from health care delivery system efficiencies.