The state of California is ready with $304 million to help lower- and middle-income consumers pay for health insurance if federal subsidies end. But the fund will cover only a fraction of what would be lost.
“We’re fortunate the state has the program, but it’s not enough,” said Laurel Lucia, director of the health care program at the University of California, Berkeley Labor Center.
Federal subsidies in last year’s American Rescue Plan have provided about $1.7 billion in health insurance premium aid for an estimated 1.7 million Californians dealing with the COVID-19 pandemic. The state aid would be about 18% of what Washington now provides.
The program is scheduled to end this year unless Congress extends it, and while there is hope that will happen, progress has been slow.
Covered California, the state health insurance program that helps people who traditionally have had difficulty obtaining and paying for coverage, and the independent Legislative Analyst’s Office, estimated the effect by income bracket if the state program were triggered:
—Incomes of less than $18,755 for an individual and $38,295 for a family of four, or 138% of the federal poverty level. There would be no premium increase. Most people at 138% or less of poverty level — $18,755 for an individual and $38,295 for a family of four — would be eligible for Medi-Cal, the state’s income-based health care program.
—Between $18,755 and $51,520 for an individual and between $38,295 and $106,000 for a family of four, or 138% to 400% of poverty level. Consumers in this bracket receive financial help from the 2010 Affordable Care Act, often called Obamacare.
State subsidies would supplement that assistance and lower their net premiums. The Legislative Analyst’s Office estimates the percentage of people’s income that would go toward paying premiums for those experiencing an increase would be an estimated 1.2% to 4.2%.
—Incomes of $51,520 to $77,280 for an individual and $106,000 to $159,000 for a family of four, or 400% to 600% of poverty level. State subsidies will be available, but Lucia saw “significant” increases for people in this income level. The legislative analyst projects increases of 5.5% to 7.5%.
A key difference between the state and federal subsidies is that the American Rescue Plan capped a consumer’s premium contribution at 8.5% of income.
The state program would have a sliding scale, ranging from 9.68% at 400% of poverty level to 16% at 600%. That means not everyone at those higher levels will be able to get a state subsidy if the cost of their coverage falls below that contribution percentage.
Another congressional push to extend federal subsidies is expected next week, but insurers are getting nervous. They need to set their 2023 rates and notify consumers.
Many Republicans are unenthusiastic about extending the subsidies. “I’d vote against that, simply for the fiscal impact,” said Sen. Kevin Cramer, R-N.D.
Cramer said that while he believes there should be full access to care, broader reforms are needed.
“If you keep aiding something that I don’t think is part of a real solution you get into that ‘Well, it might help but you’re going further down the trail’ for something that’s not going to work anyway,” he said.
Covered California plans to increase its rates by an average of 6% next year. That figure would drop about 0.5% if the federal subsidies continue.
Without those subsidies, Covered California estimates that 1 million lower-income Californians could see health insurance premiums double next year – and 220,000 could become uninsured. Even with the state subsidies, Lucia said, the number of uninsured could go up next year without federal help.
Gov. Gavin Newsom included the $304 million for state subsidies in his budget.
But that’s a small part of what Washington is currently spending.
As a result, “the vast majority will see a premium increase,” said Anthony Wright, executive director of Health Access California, a consumer advocacy group.
The state money, he said, “will soften the blow a little bit.”
