California's Newsom proposes middle-income health premium subsidy

Gavin Newsom began his term as California’s 40th governor Monday by proposing that the state provide health insurance premium subsidies for residents earning from 400 percent to 600 percent of the federal poverty level.

The Democrat also sent federal officials a letter asking the federal government to expand the Affordable Care Act Section 1332 rule waiver program, to give states more ability to “tailor their own solutions, and lay the groundwork for more comprehensive solutions, such as a single-payer system.”

Related: NYC to fund health care for all, including the undocumented

Newsom wrote in the letter, which was addressed to President Donald Trump, and to the leaders of the U.S. House and the U.S. Senate, that he is taking the following steps through executive orders:

• Establishing a state-run, single-purchaser for drugs. The state Department of Health Care Services will run the program on behalf of the state Medicaid program, other state agencies, and any employers or other private purchasers that want to participate, Newsom said.
• Establishing a California surgeon general post. Newsom said the surgeon general will look into the causes of serious health conditions and propose strategies for addressing inequality in health.

Newsom said he will include the following provisions in his budget proposal:

• Expanding access to health insurance premium subsidies. The subsidies are now available to individuals earning up to 400% of the federal poverty level, or $48,000 per year, and families of four earning up to $98,000. Newsom wants to make subsidies available to residents earning up to 600% of the federal poverty level. The new limits would by $72,840 for an individual and $150,600 for a family of four.
• Establishing a state “individual shared responsibility” provision. This would supplement or replace the federal Affordable Care Act individual coverage mandate, which requires many people to have what the federal government classifies as major medical coverage or pay a penalty. The federal penalty is now set at zero.
• Provide access to Medicaid coverage to young adults who cannot document that they are in the country legally. California now makes Medicaid coverage available for undocumented children. Newsom wants to make coverage available to undocumented residents ages 19 to 26.

Newsom is describing the executive orders and budget proposals as being part of a “California for All” agenda.

Ricardo Lara — California’s new insurance commissioner

California also has a new insurance commissioner: Ricardo Lara.

In the past, as a state senator, Lara proposed a universal health care bill that could have banned the sale of private major medical coverage in California.

Lara focused mainly on concerns about wildfires and other disasters in his first press release as commissioner, but he touched on senior market concerns and gave some attention to health coverage.

“Our seniors, people living in poverty, and immigrant communities are targets of con artists and scams,” Lara said in a statement included in the press release.

Lara also included a statement praising Newsom’s California for All agenda.

“I am excited to be your partner in expanding affordable health care for every California,” Lara said in the statement. “There is nothing we cannot achieve with our new common agenda.”

Reactions

Peter Lee, the executive director of Covered California, the state’s ACA public exchange program, welcomed Newsom’s proposals.

Lee, who has sometimes been critical of actions by other state agencies that could affect commercial health insurance, said Newsom’s actions could help make up for uncertainty from Washington.

“The governor is not only embracing policies that will lower the cost of coverage for millions in the individual market, he is also offering increased help to those who are struggling with rising costs,” Lee said.

Lee Ohanian, a senior fellow at the Hoover Institution, blasted Newsom’s actions and proposals.

“This week, California Governor Gavin Newsom begins the most liberal governorship in the state’s history, with a long list of campaign promises made to politically influential supporters,” Ohanian writes in a blog entry.

Ohanian says the California Nurses Association, a group that supports single-payer Medicare-for-All proposals, is one of those influential groups.

Ohanian says Newsom’s proposals are likely to product a “state fiscal train wreck.”

Resources

A press release describing the “California for All” package is available here.

A copy of the single-purchaser drug purchasing executive order is available here.

A copy of the state surgeon general post executive order is available here.

A video of a Newsom executive order signing ceremony is available here.

Lara’s first press release is available here.

Read more: 

• Single-payer vs. Medicare for All: What’s the difference?
• 7 facts about the new ACA waiver program, for agents
• Can a single-payer health system work in the U.S.?