LAO Publishes Analysis of Governor’s Individual Health Insurance Market Affordability Proposals

On Thursday, the California Legislative Analyst’s Office (LAO) released an analysis of Governor Gavin Newsom’s FY 2019-20 budget proposals related to individual health insurance market affordability. Citing ongoing legislative and public interest and concern related to healthcare costs, access, and affordability of individual market coverage, the LAO explores two key policy proposals by the Newsom Administration: 1) the creation of a state individual mandate with an associated financial penalty, and 2) the use of revenues from the state individual mandate penalty to provide state subsidies to reduce the cost of individual market coverage.

The LAO report details the current landscape of health insurance affordability and coverage options in California, as well as recent federal activities that have impacted the Affordable Care Act (ACA). The report also analyzes proposals laid out in the statutorily-mandated Covered California report and its recommended approaches and policy options available to the Legislature for improving affordability and increasing enrollment in the individual market.

In assessing Governor Newsom’s proposals, the LAO determines that the state-level individual mandate may be one of the most effective policy options to increase enrollment in the individual market and reduce the cost of premiums in the individual market. The LAO, however, discusses potential trade-offs of enacting a state individual mandate, including that revenues from the mandate would come at the expense of individuals who choose to pay its associated penalty instead of obtaining coverage.

Other policy options available to the Legislature are explored in the LAO report, including premium assistance and other cost-sharing reduction arrangements. The LAO provides commentary on potential implementation issues of the individual mandate and state subsidies, but ultimately recommends that the Newsom Administration’s individual mandate proposal warrants serious consideration in conjunction with other policy proposals that have been laid out related to individual market affordability. The full LAO report is available here.