Title: California Expands Health Subsidies to Lower Out-of-Pocket Costs for Residents
Subtitle: Covered California’s latest initiative aims to reduce healthcare expenses for struggling low- and middle-income Californians.
SACRAMENTO — In a significant move to address the rising healthcare costs, Covered California officials have announced their plans to allocate the revenue generated from uninsured tax penalties towards reducing out-of-pocket expenses for many residents. These new subsidies will provide relief to individuals and families struggling to afford necessary medical care.
Under this initiative, the state health insurance exchange will eliminate hospital deductibles for certain patients, up to a maximum of $5,400. Additionally, the copay for primary care visits will be reduced from $50 to $35, and the cost of generic drugs will be lowered from $19 to $15. Furthermore, annual out-of-pocket expenses will be limited to $6,100, down from $7,500 for some members.
Covered California CEO Jessica Altman emphasized the importance of these tangible reductions, stating that they will positively impact hundreds of thousands of people and encourage them to utilize their health coverage. Altman highlighted how deductibles often deter individuals from seeking essential health care, and reducing them is a crucial goal to improve accessibility.
The cost-sharing subsidies will go into effect in January 2023 for individuals renewing or purchasing coverage through Covered California during the next enrollment period, which starts in the fall. Altman expressed that with future budget increases, the state could potentially implement further measures to alleviate costs for patients in the coming years.
However, these savings may be overshadowed by increased costs elsewhere. Covered California recently announced that the annual premium rates of participating health plans are set to rise by nearly 10% next year, primarily due to inflation and other factors. This represents the most significant increase since 2018.
California first established its own individual mandate in fiscal year 2020, requiring individuals to have health coverage or face a tax penalty. The state collected $403 million in penalty revenue during the inaugural year, predominantly paid by low- and moderate-income individuals. Responding to pressure from legislative leaders and the public, Governor Gavin Newsom finally agreed to allocate a portion of the fine revenue towards increasing state grants in June.
The decision to channel tax revenue towards reducing healthcare costs signifies a significant victory for low- and middle-income residents. State officials estimate that approximately 700,000 Covered California enrollees will benefit from these cost-sharing subsidies, particularly individuals below 250% of the federal poverty level.
Senate President Pro Tempore Toni Atkins praised the move, stating that lowering deductibles is crucial for middle-class families grappling with the escalating cost of living. She also expressed their ongoing commitment to further reducing costs in the coming years.
California’s efforts to reduce healthcare costs are often regarded as the most ambitious among states with their own health coverage mandate. Larry Levitt, KFF’s executive vice president of healthcare policy, commended the incremental steps taken by California Democrats to improve the current system and achieve universal coverage.
Consumer advocacy groups, such as Health Access California, view the allocation of fine revenue as a positive step towards protecting and expanding healthcare assistance in the future. These activists also advocate for greater coverage, including lowering healthcare costs for immigrants without legal status living in the state.
Assembly Member Joaquin Arambula has introduced a bill to establish a separate health insurance marketplace for immigrants in California who lack legal status but do not qualify for Medi-Cal. The proposed marketplace would provide comprehensive coverage that aligns with plans offered through Covered California and is a step towards ensuring equal access for all residents.
As California continues to navigate the challenges of healthcare affordability, the state is making strides towards its goal of achieving universal coverage and minimizing the financial burden on its residents.