California’s Remaining Health Coverage Gaps: Causes and State Solutions

Laurel Lucia

Director, Health Care Program

UC Berkeley Labor Center

Miranda Dietz

CalSIM Project Director

UC Center Sacramento

January 23, 2018

Without further state action, how many and which Californians will be uninsured in 2020 and 2023?

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Health insurance matters

• For individuals

– Protects from financial distress

– Encourages earlier diagnosis

– Improves use of preventive services

– Reduces preventable mortality

• For society

“In our home, every person should have access to quality, affordable health care.”

- Gov. Newsom

Photo credit: Covered CA

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17.6%

10.4%

2012 2016

Uninsurance rate ages 0-64

California’s implementation of the ACA resulted in record-low uninsurance rates for the non-elderly

4Source: UC Berkeley UCLA CalSIM version 2.2

California Simulation of Insurance Markets (CalSIM) version. 2.2

• UCLA-UCB microsimulation model projects California individuals’ and firms’ decision making under various policy scenarios

• Support for CalSIM from:

– Covered California

– California Health Care Foundation

– The California Endowment

– The California Wellness Foundation

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CalSIM: creating the input data set to look like California

Assign firms

California Health Interview Survey

Reflect CA pop.

Medical Expenditure Panel Survey

California Employer Health Benefits Survey/ Employment Development Department data

CalSIM input data set

Individualspart of families part of firms

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CalSIM: model firm and family decisions

CalSIM input data set

IndividualBehavior

Output data

Employer coverage

Medi-Cal

Indiv. Mkt

Uninsured

Offers

Does not offer

FirmBehavior

Employer coverage

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Individual mandate penalty eliminated by Congress

Effective 2019 tax year

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Penalty elimination: what does it mean for California?

2020 2023

Individual Market -320,000 to -210,000 -440,000 to -280,000

Medi-Cal -290,000 to -60,000 -410,000 to -290,000

Employer-Sponsored Insurance

+110,000 to +150,000 +40,000 to +70,000

Uninsured (Total) +150,000 to +450,000 +490,000 to +790,000

+ 8% to 10% premium increase

Enrollment change due to zero individual mandate penalty, Californians age 0-64

9Source: UC Berkeley UCLA CalSIM version 2.2

Penalty elimination would have the biggest impact on individual market enrollment

-10.1%

-1.9%

0.7%

-14.4%

-3.9%

0.3%

Individual market Medi-Cal Employer-sponsored insurance

Percent change in enrollment due to zero individual mandate penalty, Californians age 0-64

2020 2023

10Source: UC Berkeley UCLA CalSIM version 2.2

Without further state action, the uninsurance rate will rise

17.6%

10.4%

2012 2016

Uninsurance rate ages 0-64

11.7%12.9%

2020 2023

11Source: UC Berkeley UCLA CalSIM version 2.2

Other potential changes could affect number of uninsured but are not modeled in CalSIM

Examples:

• Recession

• U.S. Department of Homeland Security proposed ‘Public charge’ rule

Could lead to misinformation, confusion, and fear about enrollment in public programs

Causing chilling effect on Medi-Cal enrollment among immigrants and citizens in households with non-citizens, including among those not legally subject to the public charge test

For estimates related to proposed ‘public charge’ rule see: Ponce NA, Lucia L, and Shimada T, Proposed Changes to Immigration Rules Would Cost California Jobs, Harm Public Health, UCLA Center for Health Policy Research, December 2018.

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Uninsured are more likely to be Latino and low-income

Similar to CA population Differ from CA population

87%

68% 65%

52%

86%

73%

40% 36%

Self-reported healthstatus: excellent, very

good, or good

Age 19-64, working Latino Income under 200% FPL

Uninsured in 2020 All Californians age 0-64

13Source: UC Berkeley UCLA CalSIM version 2.2

Undocumented Californians will continue to make up the largest group of uninsured

1,480,000 1,500,000

900,000 1,060,000

520,000610,000

500,000590,000

610,000680,000

2020 2023

Eligible for Employer Coverage

Not Eligible for Subsidies Due to Income

Eligibile for Subsidies Through Covered CA

Eligible for Medi-Cal

Undocumented

Uninsured by eligibility category, age 0-64

Source: UC Berkeley UCLA CalSIM version 2.2

4.02 m4.44 m

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What are the reasons for lacking insurance?

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Most undocumented adults are low-income

65%

23%

35%

77%

Undocumented Citizen and documented

139%+ FPL

0-138% FPL

Source: Nadereh Pourat, Six Facts About Undocumented Californians: Analysis of 2015-2016 California Health Interview Survey, California Health Care Foundation Snapshot, June 2018. 16

90% of low-income undocumented adults lack insurance coverage

90%

10%

Undocumented Citizen anddocumented

Notes: Low-income is defined as family income at or below 138% FPL. With the exception of undocumented adults, Californians with incomes up to 138% FPL are eligible for Medi-Cal. Undocumented adults reporting Medi-Cal coverage are assumed to have restricted-scope Medi-Cal and are considered uninsured.

Uninsured rate by citizenship status, low-income adults, California, 2015-2016

17Source: Nadereh Pourat, Six Facts About Undocumented Californians: Analysis of 2015-2016 California Health Interview Survey, California Health Care Foundation Snapshot, June 2018.

Affordability concerns can be a barrier to enrollment

• Cost is the top reason for lacking insurance among the uninsured eligible for Covered California, regardless of income level

Source: California Health Interview Survey 2016. 18

Challenges with affording premiums and out-of-pocket costs remain

Even with ACA subsidies, combined premium & out-of-pocket spending can be

• Over 10% of income for some individuals with median health use

• 20-30% for some with very high medical use

• Some face premiums equal to more than 20% of income for a Bronze plan with a $6,300 deductible

Subsidy-eligible: Earn too much for subsidies:

Source: Lucia L and Jacobs K, Towards Universal Health Coverage: California Policy Options for Improving Individual Market Affordability and Enrollment, UC Berkeley Labor Center, March 2018.

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Subsidy-eligible individuals’ premium contributions as percentage of income

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

1 51 101 151 201 251 301 351

AC

A’s

max

imu

m p

rem

ium

co

ntr

ibu

tio

n a

s %

of

inco

me

Income as percentage of federal poverty level

Single $42k - $335/mo.Family of 4 $86k - $684/mo.

Single $30k - $203/mo.

Annual family income and net monthly premium after subsidies for 2nd lowest cost silver plan:

Example: Married couple with income equivalent to 450% FPL

• Married couple, both age 55 and self-employed, living in San Mateo, and earning $73,080 annually (450% FPL)

• $1,200 per month total for the lowest cost Bronze plan offered, or nearly 20% of the couple’s income

• Plus any out-of-pocket spending on health care costs under the plan’s $6,300 deductible

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Source: Lucia L and Jacobs K, Towards Universal Health Coverage: California Policy Options for Improving Individual Market Affordability and Enrollment, UC Berkeley Labor Center, March 2018.

Photo credit: Transient musket (CC BY-NC-ND 2.0)

Family premiums increased nearly 6 times faster than inflation since 2002

13.4%

248.8%

2.8%

44.4%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Cumulative Premium Growth for California Employer-Sponsored Family Coverage Compared to Inflation, 2002-2017

Source: California Employer Health Benefits Survey 22

State Options: Universal Coverage

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U.S. spends more and gets less – state considering single payer or other unified financing approach

24Source: Schneider et al. Mirror, Mirror 2017: International Comparison Reflects Flaws and Opportunities for Better U.S. Health Care, The Commonwealth Fund, July 2017.

State has options in near-term to move closer to universal coverage and control costs

Without federal approval, California could:

• Expand Medi-Cal to all low-income residents regardless of immigration status

• Provide state subsidies to improve affordability of individual market premiums and out-of-pocket costs

• Establish a state individual mandate penalty

• Continue to support and strengthen outreach and enrollment efforts

• Implement state policies designed to slow the rate of healthcare cost growth or reduce healthcare costs while also improving quality

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Medi-Cal for undocumented Californians

• 955,000 adults in restricted-scope Medi-Cal could be automatically transitioned to full benefits

• Legislative Analyst’s Office estimates more than 1 million undocumented adults would enroll at state cost of $3.0 billion

• Governor’s budget proposal: $200 million in state funds to cover 138,000 young adults ages 19-25 in 2019-2020

Sources: DHCS, Medi-Cal Monthly Enrollment Fast Facts - June 2018. California LAO, Estimating the Cost of Expanding Full-Scope Medi-Cal Coverage to Undocumented Adults, May 2018. Governor Newsom, 2019-2020 Governor's Budget, January 2019.

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Photo credit: Carlos Ebert (CC BY 2.0)

Provide subsidies to make individual market insurance more affordable

• Provide additional premium and out-of-pocket assistance to individuals with income under 400% FPL who are already eligible for ACA subsidies

• Cap premium contributions for individuals who earn too much to be eligible for ACA subsidies

• State cost estimates range depending on details

– Preliminary estimates for Covered California AB 1810 Affordability Workgroup process range from less than $500 million to $2+ billion

– Governor’s budget proposal allocates approximately $500 million

Sources: Covered California, Options to Improve Affordability in California’s Individual Health Insurance Market, Working Draft, January 16, 2019. Governor Newsom, 2019-2020 Governor's Budget, January 2019. 27

Individual mandate: the California edition?

• Governor’s budget proposes penalty modeled after federal requirement, estimates $500 million in revenues

• MA, NJ, DC, VT already have state individual mandates in place or being implemented

?

Sources: Levitis J, State Individual Mandates, October 2018. Governor Newsom, 2019-2020 Governor's Budget, January 2019. 28

Continue strong outreach and enrollment efforts

Photo credit: Covered California.

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State policies and actions to slow health care cost growth while improving quality

Examples:

• Antitrust enforcement

• Improved transparency

• Increased negotiating leverage for public and private purchasers

• Insurance rate review

• Provider rate regulation

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Summary

• If no state action taken, 4+ m uninsured by 2020

• Undocumented largest group

• Affordability concerns persist

• Long-term: single payer or other unified financing approach

• Short term: state can take steps without federal approval

– Medi-Cal for low-income undocumented adults

– State subsidies to improve affordability

– State individual mandate penalty

– Outreach and enrollment efforts

– Policies that help control cost growth

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Key Resources

Recent and forthcoming publications:

• California’s Health Coverage Gains to Erode Without Further State Action

• Proposed Changes to Immigration Rules Would Cost California Jobs, Harm Public Health

• Towards Universal Health Coverage: California Policy Options for Improving Individual Market Affordability and Enrollment

• Towards Universal Health Coverage: Expanding Medi-Cal to Low-Income Undocumented Adults (Forthcoming)

Other research:

http://laborcenter.berkeley.edu/topic/health-care/

https://healthpolicy.ucla.edu/Pages/home.aspx

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Contact

• Laurel Lucia, Health Care Program Director, UC Berkeley Labor Center, Laurel.Lucia@Berkeley.edu

• Miranda Dietz, CalSIM Project Director, UC Berkeley Labor Center, Miranda.Dietz@Berkeley.edu

Sign up to receive updates on our research: http://laborcenter.berkeley.edu/mailing/

Follow: @UCBLaborCenter

@UCLAchpr

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