According to CBS Los Angeles, people who rely on California’s health insurance marketplace will see an average premium increase of only 0.8% for 2020. California’s decision came in response to federal attacks on Obama’s Affordable Care Act. Rather than see millions of Californians lose coverage, the state worked the ACA into state law. It restored the individual mandate and put in place an informal rate cap funded by state subsidies. To put this into better perspective, note that California premiums typically increase by 7.9% each year, as it has since 2014.
Roughly 2.2 million people rely on Covered California for insurance and another 229,000 are expected to join due to expansions for eligibility. Some people may also wish to avoid the individual mandate penalty and take advantage of rate stabilization. This decision not only puts hundreds of millions of dollars back into Californians’ pockets; it also makes California the very first state to offer financial assistance to middle-class residents.
The Move to Keep Californians Covered
According to the LA Times, the projected average increase of just 0.8% will be the lowest in Covered California’s entire history. Supporters of the new provisions say that they came just in time as the new administration has been chipping away at the Affordable Care Act. For example, during the tax reform negotiations for 2018, Congress removed the individual mandate.
The individual mandate has been a point of contention even among liberals for some time with good reason. It was not that people wished to voluntarily opt out of health insurance, but rather that some people made too much money to receive financial aid. These consumers then faced the difficult position of paying higher insurance premiums or paying a penalty.
California eliminated this hiccup by extending state-funded tax credits for health insurance to people who earned between 200% and 600% of the federal poverty level. This means that Californians who make up to 50,000 as individuals and up to 103,000 as a family of four, may now qualify for financial aid.
Health Insurance Extended to Young Immigrants
One of the surprising benefits of California’s attempt to beef up Obamacare in the state is to extend health care benefits to undocumented immigrants. According to USA Today, the Golden State just became the first U.S. state to do so.
The $98 million initiative will provide benefits for 100,000 undocumented immigrants from the ages of 19 to 25. They will access these benefits via the state’s Medicaid program, Medi-Cal. While drafting the plan, lawmakers also considered extending health care to undocumented immigrants 65 years and older, but Governor Gavin Newsom decided the state could not afford it.
The Bottom Line
Many people believe that this act of goodwill from California will put the state in debt. However, USA Today estimates that California will now have a surplus of $20 billion, which is the highest in two decades. The California Immigrant Policy Center support the move, but are saddened by the fact that elderly undocumented immigrants could not be included.
Are you considering your insurance options before the individual mandate takes effect in 2020? Call us at 707-823-3689 to learn about our insurance offerings or request a quote today.