Gov. Gavin Newson announced sweeping proposals to tackle the state’s healthcare needs shortly after taking office on Monday, outlining a dramatic Medi-Cal expansion that would cover young undocumented adults, a requirement that all consumers in the state carry health insurance and increased subsidies for middle-class families to help those who need it.
The Day 1 announcement was as much a rebuke to the Trump administration as it was an attempt by Newsom to make good on his campaign promise to fix a fragmented healthcare system that leaves many priced out or underinsured.
“Every person should have access to quality, affordable healthcare,” Newsom said earlier Monday in his inaugural address. “Far-away judges and politicians may try to turn back our progress. But we will never waver in our pursuit of guaranteed health care for all Californians. We will use both our market power and our moral power to demand fairer prices for prescription drugs. We will stop stigmatizing mental health and start supporting it. And in California we will always protect a woman’s right to choose.”
Newsom campaigned on a universal healthcare platform and has said the issue would be among his top priorities. His announcement on Monday stopped short of the single-payer system demanded by activists that would cover all residents’ healthcare costs, but was characterized as the first step down that path.
The new governor also said through his office Monday that he intends to send a letter to Congress and the White House asking for changes to federal laws so that the state can have the regulatory freedom to overhaul the state’s healthcare system and move toward single payer.
“We are very pleased that this is a governor who has put forward the vision of universal healthcare and also seeks to make tangible year one steps to increase access and improve care,” said Anthony Wright, executive director of Health Access California, a consumer advocacy group. “These are key steps toward universal guaranteed coverage.”
Some of the new healthcare proposals will be included in Newsom’s state budget that will be released Thursday and vetted in the coming months by the Legislature.
California would be the first state to cover immigrants without legal status who are younger than 26 years old through Medi-Cal, the state’s health program for people with low incomes. California already covers undocumented children until they turn 19, with Newsom’s plan increasing the age cut-off to mirror that of the Affordable Care Act, which allows young adults to stay on a parent’s health insurance plan until turning 26.
A legislative proposal last year pegged the cost of extending Medi-Cal to undocumented immigrants under 26 at $250 million a year. That cost would fall solely to California, despite the mix of federal and state money that typically comprises Medi-Cal funding because the Affordable Care Act prohibits the use of federal dollars for covering immigrants who are in the U.S. illegally.
Newsom’s proposal would also create an individual mandate in California to thwart predicted drops in the state’s health insurance market after the federal government removed financial penalties for uninsured consumers beginning this year. The requirement that consumers have health insurance or face financial penalties propped up the Affordable Care Act, or Obamacare, and its elimination is expected to drive up premiums.
Without the individual mandate, all consumers will experience rate increases this year, said officials for Covered California, the state's official health insurance marketplace.
“The cost of the penalty removal will manifest for unsubsidized consumers in higher rates. While subsidized people will not bear the full costs, taxpayers will,” Covered California Executive Director Peter Lee said in a statement in July. “The additional losers from this policy change will be those who decide to roll the dice, go without coverage, and end up with hundreds of thousands of dollars in medical bills.”
Newsom’s plan to create a individual mandate for Californians could be a heavy lift, even in the Democrat-dominated state Legislature, where such a requirement could require a two-thirds vote.
Representatives for the governor’s office said requiring people to carry health insurance is central to another proposal to increase financial subsidies for middle-income families. Newsom’s budget will propose that the income cap be raised so that individuals earning up to $72,840 and families of four earning up to $150,600 could qualify for lower premiums.
While those proposals have to withstand legislative scrutiny, Newsom took his pen on Monday to an executive order that does not.
Newsom signed an order to create a Surgeon General oversight position in the state and to consolidate pharmaceutical purchases in hopes of lowering drug costs for the state and consumers. Under the current system, Medi-Cal and state agencies separately negotiate prescription drug prices. Under the order, Newsom’s office said the state would become the largest single purchaser of prescription drugs.
The governor’s order would allow small businesses or individuals to join the public collective at the same price points.