On his first day in office, Gov. Gavin Newsom unveiled a sweeping health care plan that would prop up the Affordable Care Act, expand health care for undocumented immigrants and give the state new powers to negotiate drug prices.
Newsom’s announcement came just hours after he was sworn in as governor in a ceremony where he pledged to expand health care access and make prescription drugs more affordable, echoing promises he made in his campaign.
His plan would reinstate the individual mandate, a tax on people who don’t have insurance that was part of the federal Affordable Care Act. Congress revoked it in 2017, allowing people to opt out of having health insurance without a penalty.
Republicans in Congress and President Donald Trump argued it was unfair to penalize people for choosing not to have insurance. Trump in his 2016 presidential campaign pledged to dismantle the Affordable Care Act, also known as Obamacare.
A Texas judge cited the repeal of the individual mandate in his decision to strike the entire Affordable Care Act last month, arguing the law couldn’t stand without that provision. His decision is being appealed and the law remains in place in the meantime.
Revenue from imposing the penalty at the state level would subsidize health insurance for individuals earning up to $72,840 annually and families of four earning up to $150,600. The state subsidies would build on existing federal subsidies for people at lower income levels.
Peter Lee, director of the state’s health insurance marketplace, cheered Newsom’s plan, saying it would help keep California’s health care system stable and encourage people to enroll in coverage.
“At a time of ongoing uncertainty from Washington, the governor is not only embracing policies that will lower the cost of coverage for millions in the individual market, he is also offering increased help to those who are struggling with rising costs,” Lee said.
Drug prices
Newsom also announced signing an executive order that makes the Department of Health Care Services responsible for negotiating all drug prices for Medi-Cal, the state’s health insurance program, a dramatic expansion of the department’s power to negotiate prices.
Currently, drug prices for Medi-Cal are negotiated piecemeal by public and private entities. The order also directs state agencies to collaborate when purchasing prescription drugs. It’s intended to give the state leverage to negotiate lower prescription drug costs.
“It’s important that the governor is focused not just on coverage but on cost,” said Anthony Wright of Health Access California, which advocates for expanded access to health care. He described Newsom’s plans as “concrete, tangible steps toward universal coverage in California.”
Help for immigrants
Newsom’s announcement Monday includes a budget proposal to expand Medi-Cal eligibility to young adults living in the country illegally. Currently, children without legal status are eligible for Medi-Cal benefits until they turn 19. Newsom wants to extend that age limit to age 26.
His plan doesn’t go as far as the one proposed by Democratic lawmakers this legislative session, which would let all adults access Medi-Cal regardless of immigration status, provided they meet the programs income requirements.
Newsom’s announcement didn’t include a cost estimate for his plan. The broader Democratic proposal would cost about $3 billion annually, according to the Legislative Analyst’s Office.
The California Immigrant Policy Center, which supports the Legislature’s plan, applauded the governor’s proposal.
“Making sure healthcare is affordable and accessible for every Californian, including undocumented community members whom the federal government has unjustly shut out of care, is essential to reaching that vision for our future,” the group said in a statement. “Today’s announcement is an historic step on the road toward health justice for all.”
Single-payer
Also on Monday, Newsom sent a letter to Trump and congressional leaders asking for permission for California to pursue a government-funded health care system known as “single payer.” It’s unlikely the federal government will cooperate with Newsom’s liberal plans.
Newsom was endorsed by the California Nurses Association and pledged during his campaign to pursue universal health care.
Assemblyman Chad Mayes of Yucca Valley, the highest-ranking Republican on the Assembly Health Committee, issued a neutral statement on the proposal.
“Gov. Newsom has put considerable thought into these policies and demonstrated he is serious about health care reform. These complex proposals require a lot of scrutiny to fully understand the consequences – both good and bad. We agree on the goals of reduced costs, increased competition, and better quality healthcare for all Californians,” Mayes said.
Democrats have supermajorities in both houses of the Legislature and could adopt Newsom’s proposals without Republican votes.
The governor also signed an executive order establishing a California surgeon general to work on reducing health-related inequality in the state.