Think Tank

How To Pay for Health for All?

A bill introduced in the California Legislature this year offered a plan that would give undocumented California residents access to expanded Medi-Cal and create a dedicated insurance exchange for all who do not qualify for coverage under the Affordable Care Act. Medi-Cal is California’s Medicaid program.

Known as the Health for All Act (SB 1005) was put on hold by the Senate Appropriations Committee. The proposal, which included state-funded subsidies, did not have a price tag.

The author of the bill, state Sen. Ricardo Lara (D-Long Beach), plans to try again next year.

Although the bill generated no formal opposition, without some kind of funding mechanism the idea is likely to stall again, most observers believe.

Some creative suggestions have emerged including establishing new fees on remittances sent out of California to foreign countries and raising the fee for driver’s license applications.

We asked legislators, stakeholders and consumer advocates if California should expand coverage to include undocumented immigrants and others who fall through the ACA cracks. If the answer is yes, we asked how the state should pay for it.

We got responses from:

Important to Continue Leading Nation

Health Happens Here — The California Endowment’s campaign to elevate healthy communities around the state — is not a coincidence; it is a fact. California is the celebrated home of affordable health care. No state has flourished like California under the Affordable Care Act, with millions reaping the benefits of newfound health coverage. California can set a national example by providing health care for all — including undocumented Californians.

Immigration status should not block access to the care that will keep these Californians healthy and productive. The current “fix” — emergency and restricted Medi-Cal for undocumented residents — is an out-of-date solution.

California’s undocumented population serves this state with remarkable dedication. The men, women and families who come to California join our communities, provide key services and goods and contribute to the economy.

Sadly, our neighbors and friends have been dehumanized by cruel myths and absurd claims.

The reality: About one in 10 workers in California is undocumented. Of these nearly two million wage earners, 38% drive the state’s billion-dollar agriculture industry and another 14% help build our homes and the buildings we work in. These typically low-wage jobs with high physical demands demonstrate why opening access to the undocumented is so critical; they are vital to California’s growth.

In addition to bolstering the workforce, undocumented immigrants spend their wages and pay taxes in California. The California Immigrant Policy Center notes that undocumented immigrants paid $2.7 billion in state and local taxes, while being barred from many of the benefits of those tax dollars available to other Californians. Our values and priorities suggest we must work toward finding a funding solution for shared prosperity.

Dismissing open access for health care because policymakers can’t agree on a revenue stream is unreasonable and obstructionist, and it prolongs the unnecessary suffering of children, families and workers.  

In 2012, Proposition 30 highlighted California’s ongoing revenue problem and presented a temporary solution. However, to secure the state’s budget while committing to advance the interests and values of Californians — like health care for all, we must find a permanent and stable solution.

Expanding Medi-Cal would be a minimal cost that could result in savings down the road. A recent UC-Berkeley Labor Center study shows that expanding Medi-Cal to all Californians would cost just 2% of the state’s current Medi-Cal spending, primarily because of increasing preventive care. And an ounce of prevention is still worth a pound of cure.

Californians have written “healthy and growing” on the state’s marquee. But to make those words a reality, we must extend access to health care to everyone. Providing an opportunity for a healthy life to all is not just a demonstration of compassion, it’s the right thing to do.

Honoring Promise of Health Reform for All Californians

Under the ACA, 3.4 million Californians got health coverage through Medi-Cal or Covered California. Unfortunately, about one million Californians will remain uninsured and not eligible for health coverage due to their immigration status.

There are many economic reasons why undocumented immigrants should have access to health care:

  • The health care system works better when everyone participates;
  • Preventive care is less costly than urgent or emergency care; and
  • A healthy workforce, including undocumented immigrants, contributes to the state’s revenue.

Undocumented individuals currently contribute more than $130 billion to California’s annual economy. However, California should expand coverage to undocumented individuals because it is the right thing to do. These Californians are our family, our neighbors, our friends and our co-workers.

SB 1005, a bill introduced by Sen. Lara this year, would have provided all Californians access to health coverage, regardless of immigration status. Known as the Health for All Act, the bill would have expanded Medi-Cal access to undocumented Californians and would have created a dedicated insurance exchange for everyone who did not qualify for coverage under the ACA. Western Center strongly supported the bill, but it was held in the Senate Appropriations Committee. 

Because the Health for All Act provides a shared benefit for all Californians, the cost should be paid by the state general fund. Some believe the bill will stall again without a named funding source beyond the general fund, but advocates are looking at additional savings to make the bill more palatable. 

At a fundamental level, our state budget reflects California’s values and priorities. Through their hard work, undocumented individuals feed, clothe and care for the state. Therefore, it’s only right that these individuals have access to health coverage. The Health for All Act reflects our belief that all Californians should have equal opportunities to obtain health coverage and care.  

Fulfilling Vision of Affordable Care Act

In 2010, after decades of debating whether health care was a privilege or a right, Congress and President Obama ended the debate by enacting the Patient Protection and Affordable Care Act into law. The goals of the ACA are to give more Americans access to affordable, quality health insurance, and to reduce the growth in health care spending in the U.S.

California is home to the most diverse and largest population of uninsured families in the nation, and thus has the most to gain from the law. Under the ACA, millions of Californians, including some long-term legal immigrants, are newly eligible for health coverage. However, California is far from being able to insure all of its residents because of a major flaw in the law due to an irresponsible and shortsighted decision by Congress to exclude some legal immigrants and undocumented immigrants from the law.

This year, Sen. Ricardo Lara introduced a pragmatic yet bold proposal — SB 1005 Health4all Act — seeking to provide access to health care for undocumented immigrants. This proposal would fulfill the spirit of the ACA and calls for a small investment by the state. A report by the UC Berkeley and UCLA Center for Health and Policy Research states “[an] investment to provide health coverage to [New Americans] would be substantially offset by an increase in state sales tax revenue from managed care organizations, in addition to savings from reduced county spending in providing care to the uninsured.”

The lack of inaction is even more costly. Citizens will pay more for their health insurance as a result of a smaller pool of people that will be required to have health insurance, and the cost of care in emergency departments will continue to be passed along to all the taxpayers. Further, U.S.-born children in mixed-status families will continue to be exposed to financial insecurity because one of their parents would continue to lack health insurance and be one step away from financial insecurity if an accident occurs. Among Californians, 42% of undocumented families report not being able to pay for basic necessities because of medical bills. This is higher than the 27% among U.S.-born citizens, according to a report from the Henry J. Kaiser Family Foundation.

Our state must act now to make health coverage affordable for all Californians and be a model for the rest of the nation.

Investing in Care Is Investing in Future

Imagine having to choose between putting food on the table or taking yourself or a sick child to the doctor. Imagine having a condition like diabetes, which should be easy to treat, spiral so far out of control that you lose your sight. Think of the loss — to your own life, your own family, to your work, to your community — and to the economy, too. 

As a country and as a state, we’ve recognized that this shouldn’t happen. We’ve recognized that ensuring health for all not only makes tremendous common sense, but it makes tremendous economic sense as well.

However, one group is still left out, because Congress unjustly and purposefully excluded undocumented community members from the Affordable Care Act.

Here in California, only two out of five undocumented residents are covered from employment-based insurance, while more than one million are shut out from affordable care.

With Sen. Lara’s Health for All Act, we can right this wrong and create an efficient, cost-effective health system that benefits us all.

The act would expand Medi-Cal to all low-income Californians and also create a parallel health exchange, similar to Covered California.

So, how do we pay for this?

The fact is, that expanding affordable health care to all Californians is incredibly cost effective. For a modest investment in a stronger and healthier California, we’ll secure a powerful return.

Let’s look at the math. According to the UC-Berkeley Labor Center, California could expand Medi-Cal to undocumented immigrants by paying just two cents more for every general fund dollar our state is already spending on the program.

And the good news doesn’t end there.

To expand Medi-Cal to all, we can leverage funding from hospital presumptive eligibility and funds in the existing emergency Medi-Cal program, which already enrolls 800,000 Californians. Additionally, we can take advantage of substantial offsets from state sales tax revenue from health care insurers through the MCO tax. Meanwhile, counties would experience a natural reduction in spending on the uninsured population.

For the mirror exchange that Health for All would create, undocumented consumers would contribute a share of premiums ranging from 2% to 9.5% of their income, as well as copays, deductibles and coinsurance just as other Californians covered by Covered California do today.

As the legislative process moves forward, if it becomes clear that despite the mathematical reality, we’ll need to generate additional revenue for such a program, then we must find progressive solutions that aren’t going to further deepen poverty.

Access to health care is a public concern, and undocumented immigrants should not be singled out and made to pay a disproportionate share of the cost of a program that benefits the public well-being. Undocumented immigrants contribute over $2 billion in taxes to the state of California, and they are keeping our state’s economy healthy. Don’t we owe them the same?

At the end of the day, investing in immigrant families is investing in our state’s future.

Providing Coverage Smart, Cost-Effective

Immigrants are a vital part of California’s economy and our community — they should be fully included in our health system as well. Health Access California, the statewide health care consumer advocacy coalition, strongly supports efforts to give all Californians the same access to health care and coverage regardless of their immigration status, including SB 1005.

SB 1005 built on existing programs, including Medi-Cal, to provide coverage with the same benefits, premiums and cost sharing for the undocumented as for other Californians with the same income.

Many of the remaining uninsured are undocumented and not eligible for comprehensive coverage under the Affordable Care Act. Most are already enrolled in emergency-only Medi-Cal even though emergency room care is the most expensive, inefficient and ineffective approach to care. Providing children comprehensive coverage is so much more cost effective that it is estimated to cost less than emergency-only coverage for children. For adults, providing comprehensive Medi-Cal coverage costs about a third more than emergency-only coverage — for this modest investment, undocumented adults would get the same primary and preventive care as others on Medi-Cal.

Other potential cost offsets include realignment dollars, hospital presumptive eligibility, limited benefit programs and federal match for those already eligible for state-only Medi-Cal like those with “deferred action” status.

The realignment formula approved in the 2013-2014 budget means that in counties with about half the undocumented, moving the undocumented from the county safety net to comprehensive coverage will automatically generate some state general fund savings.

Under federal law, hospital presumptive eligibility pays for full-scope Medi-Cal benefits for up to 60 days.

Similarly, existing limited-benefit programs such as Every Woman Counts, a breast cancer program, provide access without regard for immigration status: moving people to comprehensive coverage will reduce the cost of that program.

More than 100,000 young adults are today eligible for full-scope Medi-Cal because they are “DREAM Act” students and others with deferred action (DACA) status: if California was able to claim federal match equal to what California would have received if these individuals had been enrolled in emergency-only Medi-Cal, there would be substantial cost savings to the state.

California already invests substantial general fund dollars in providing comprehensive coverage to millions of Californians. Extending this investment to those who are undocumented is one of the civil rights issues of our time — and California can do it in a smart, cost-effective way that strengthens the health care system that we all rely on.

Eventually, California Will Make the Right Decision

In the early 1990s, President Clinton developed health care reform legislation that if enacted, would have brought coverage to millions of Americans.  After that disappointing failure, who would have thought that decades later, President Obama and Congress would succeed in enacting the Affordable Care Act, which has brought health care coverage to millions of individuals in California alone.

Sadly, our undocumented population was left out of health care reform, despite the fact that providing coverage to this valuable and essential workforce in our communities will reduce costs to the overall public health system by moving them out of costly ERs and into primary care settings to address their health care needs.
Sen.  Lara has taken the first step in doing this by introducing SB 1005, which would have given coverage to California’s undocumented residents through expanded Medi-Cal or a dedicated insurance exchange. Even more important, Senator Lara, along with others in the Legislature, have made this issue a priority and have pledged their commitment to seeing it through. Developing a funding mechanism for this kind of program continues to be a challenge, but it should not be a barrier in moving this issue forward. While there are a number of ideas for doing this, any funding mechanism created should not place additional burdens on the low-income families this legislation is trying to help.
Investing in the health of our communities is vitally important and a sound investment for the state. An independent CalSIM report released in May indicated that the cost of extending health benefits to the undocumented would result in a return that would offset much of the overall cost.  The bottom line is this investment makes sense both from a public health and an economic standpoint.

Regardless of the success of the legislation next session and into the foreseeable future, California’s community clinics and health centers will continue to provide services to all Californians, including our undocumented population. CPCA and our members are committed to working with all parties involved to find an equitable solution to this issue and pledge our continued strong support of these efforts. We have seen over the years that leadership, persistence, and tenacity do pay off.  The same applies in the case of Sen. Lara’s efforts to extend coverage to the undocumented residents of our state.  This is a monumentally important first step in a process that will surely take time — but in the end, California will make the right decision and extend health care coverage for all.