Budget, Reports | February 25, 2022

LAO Publishes Assessment of Governor’s Health Care Access and Affordability Budget Proposals

The Legislative Analyst’s Office (LAO) this week published a brief assessing various January Budget proposals from the Newsom Administration related to improving health care access and affordability in California. The LAO details opportunities for the Legislature to improve affordability of health plans purchased through Covered California, as well as key access and affordability challenges that remain.

Notably, the LAO covers the following significant health access and affordability items:

Full-Scope Medi-Cal Coverage to Remaining Income-Eligible Undocumented Populations – The LAO determines the Newsom Administration’s proposal is consistent with past legislative efforts to expand Medi-Cal coverage to younger and older undocumented residents. The proposal would substantially reduce the number of residents who do not have access to comprehensive health insurance, and the LAO encourages the Legislature to closely assess the Administration’s caseload and cost estimates. The LAO suggests legislators explore an accelerated implementation timeline, including by incrementally expanding coverage.

Reduce Medi-Cal Premiums to Zero Cost – The Governor’s proposal to reduce all Medi-Cal premiums to $0 beginning July 2022 would help improve affordability and access to health coverage for certain populations, according to the LAO. The LAO encourages legislators to seek additional information on how past-due premiums would be handled but agrees with the policy basis for the proposal.

Establish the Office of Health Care Affordability – The LAO details the context of health care costs in California, as well as previous attempts to establish a similar office in the state. The Governor’s proposal would establish the office through budget-related legislation and reappropriate $30 million General Fund to establish the office that was included in the 2021-22 Budget. Overall, the LAO determines creating the office is a reasonable yet ambitious step toward controlling health care costs and urges legislators to ensure continued monitoring of implementation. The LAO further outlines several issues for further consideration by legislators, including ensuring legislative oversight of the office.

Reduce the Cost of Insulin – The Newsom Administration has announced a forthcoming potential partnership to manufacture insulin in California. The LAO determines insulin could be an appropriate focus for a partnership but looming uncertainties around the proposal leads the LAO to recommend holding off on approving the proposal. Specifically, the LAO recommends an evaluation of legal, market, policy, and regulatory factors that could impact the partner, as well as whether the state would be able to produce insulin at a price that results in savings and improves patient access to affordable medication.

The LAO further identifies options to improve affordability of health plans purchased through Covered California, including eliminating deductibles for certain beneficiary populations. The LAO rounds out its report on health access and affordability by detailing outstanding issues for consideration by legislators.

The full LAO report is available here.