Health Reform Facts: California

DEMOGRAPHY

Figure 1: Population in the State of California per Race /

California has the largest population
in the United States, estimated to be Ethnic Group
36,961,664 in 2009. i California is also
very diverse (Refer to Figure 1), which
makes this state unique in many
ways, including health care needs,
and presents a special challenge to
those trying to implement health
reform in the state.

With the enactment of the Patient

Protection and Affordable Care Act
(ACA) on March 23, 2010, Federal
government agencies and reform
advocacy organizations will work with
California state officials and
stakeholders to implement the many
reforms contained in ACA.

CALIFORNIA AND THE UNINSURED: HOW WILL THE AFFORDABLE CARE ACT HELP?

While 81% of all Californians have some type of health insurance coverage ii, over 6.5 million individuals remain
uninsured, including about 11% of California’s children and almost a quarter of the state’s working population
(22.4%). iii

ACA is designed to address this concern by providing affordable access to health insurance coverage to those
individuals that would otherwise be unable to gain coverage, and extend current benefits and services provided
by Medi-Cal (Medicaid in California, a federal and state funded public insurance program that provides health
care coverage for low-income individuals and families).

NEW BENEFITS OF ACA AND THEIR EFFECTS IN CALIFORNIA

In order to help individuals afford health insurance coverage, ACA provides a subsidy to qualified
individuals to cover part of the cost of their health insurance premiums. Qualification for the
Tax Credits
credit is based on the individual’s household income and the insurance coverage must be
for
purchased through their state’s health insurance exchange. Based on an analysis of California’s
Individuals
economic demographics, more than 2.7 million uninsured California residents would qualify for
this tax credit. iv

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 High-Risk Pools are programs designed to provide health insurance coverage to people who were
previously uninsurable due to a pre-existing condition. California has its own program
High-Risk called Major Risk Medical Insurance Program. In 2008, this program covered 7,036 individuals in
Insurance the State of California v. Gov. Schwarzenegger indicated to the Health and Human Services (HHS)
Pools Secretary Kathleen Sebelius his interest to establish a new federally-funded high-risk pool vi.
According to a recent analysis, this program may be able to provide services to 30,000
Californians per year when fully implemented. vii

ACA establishes new requirements for private health insurers in order to make health care plans
more accessible to the public. These requirements include:
 Under ACA, insurers cannot drop any person insured because they get sick or developed a
chronic health condition, except in cases of fraud or misrepresentation. ACA furthers allows
individuals to renew health insurance coverage regardless of health status.
 Plans should offer dependent coverage to children until they turn 26 years of age. (Effective
Insurance September 2010)
Market  Plans must cover certain preventive health services, like specific immunizations (vaccines) and
Reforms screenings, without a co-pay. (Effective 2010)
 An insurer must accept every employer and individual in the state that applies for coverage.
This is known as the “guaranteed issue” requirement. (Effective January 2014)
 Insurers cannot exclude people from coverage if they have a pre-existing condition (e.g.,
asthma, diabetes, or any other chronic condition) or past illness. (Effective January 2014)
 All insurers will be required to offer a basic package for coverage that offers essential
benefits. (Effective January 2014)

Expansion ACA contains provisions which would create new eligibility requirements for Medi-cal, California’s
of Medicaid program. Childless adults, for example, are now eligible to apply for Medi-Cal. Starting
January 1, 2014 all adults under 65 years old with a certain income will be eligible to apply. The
Medi-Cal Legislative Analyst’s Office in California estimates that thanks to new regulations approximately 2
(Medicaid) million Californians will be able to join Medi-Cal. viii

ACA requires that states create an insurance market “exchange” – a market place where people
Health will be able to comparatively shop for health insurance coverage. This will make access to health
Insurance plans easier and more efficient. US citizens, legal immigrants and small businesses will be able to
Exchanges join these exchanges to purchase insurance. One study estimates that by 2016 up to 8.4 million
Californians would be eligible to join this market place. ix

In 2006, California had over 700,000 small employers, which represented over 95% of the state’s
employers. ACA makes available tax credits to certain qualifying small businesses to help these
Small employers afford coverage for their employees, which could amount to receiving a credit for up
Business to 50 percent of the employer’s contribution to their employees’ health insurance premiums.
Assistance According to an analysis conducted by the Agency for Healthcare Research and Quality (AHRQ),
392,000 small businesses are potentially eligible for the tax credit starting in 2010. x

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 IMPLEMENTATION CHALLENGES IN CALIFORNIA

Successful Implementation of ACA will require a joint effort among local, state, and federal agencies, as well as
many non-governmental organizations. The State of California will face several challenges:
 Budget – In the proposed budget for California’s Fiscal Year 2010-2011, Gov. Schwarzenegger proposed
several changes to the Medi-Cal program including new copayments for services, limits to physician visits,
and freezing hospital rates. xi The limited budget in California will be a real challenge for implementation,
specifically when expansions for services are expected.
 Health Care Workforce – With the potential increase on California’s insured population it is important to
assure primary care physicians and other necessary health care professionals are engaged in this effort. ACA
provides benefits to increase the health care workforce in the form of grants and loan forgiveness program,
which will help California ensure they have an appropriate supply of doctors, nurses, social workers and
other professionals to cover the increased demand.
 Insurance Oversight – California’s government will need to work alongside HHS and other Federal agencies
to establish procedures and reporting requirements to ensure that insurers comply with ACA regulations.
This has the potential to increase the burden on the California’s state insurance commission as it will be
expected to take on greater responsibilities due to the proposed regulatory changes. xii
 Diverse Population – California’s diverse population presents a special challenge to those implementing ACA
in the state. A key concern for California residents regarding their current health care system, and which any
reform must address, is access to care that is sensitive to the state’s language, economic, and cultural
diversity. This means that access to a physician and the ability to understand one’s treatment or care should
not be threatened by one’s ethnicity, language, culture, or economic status.

REFERENCES:
i
U.S. Census Bureau. State and County QuickFacts. (April 22, 2010) Retrieved from and State Characteristics. The Urban Institute (August 2009).
Retrieved from http://www.urban.org/uploadedpdf/411939_childrenofimmigrants.pdf
ii
Urban Institute and Kaiser Commission on Medicaid and the Uninsured estimates based on the Census Bureau's March 2008 and 2009 Current
Population Survey (CPS: Annual Social and Economic Supplements). (n.d.) Retrieved from
http://www.statehealthfacts.org/comparetable.jsp?ind=125&cat=3&sort=156&rgnhl=6
iii
Robert Wood Johnson Foundation. U.S Uninsured Workers. Cover The Uninsured. Retrieved from
http://covertheuninsured.org/uninsured_workers#map
iv
Analysis of Kaiser State Health Fact Data, which was based on the Census Bureau’s March 2008 and 2009 Current Population Survey. Retrieved
from http://www.statehealthfacts.org/profileind.jsp?cat=3&sub=40&rgn=6
v
National Conference of State Legislatures, Coverage of High-Risk Uninsurables: State and Federal High-Risk Pools. May 27, 2010 Retrieved from
http://www.ncsl.org/?tabid=14329#2010_Pools
vi
Schwarzenegger, A., Gov. Schwarzenegger and Legislative Leaders Send Letter to HHS Secretary Sebelius on Federal Medicare and Medicaid
Funding (April 27, 2010) Retrieved from http://gov.ca.gov/press-release/15021/
vii
Taylor, M., The patient Protection and Affordable Care Act: An Overview of its Potential Impact on State Health Programs. (May 13, 2010)
Retrieved from http://www.lao.ca.gov/reports/2010/hlth/fed_healthcare/fed_healthcare_051310.pdf
viii
Taylor, M., The patient Protection and Affordable Care Act: An Overview of its Potential Impact on State Health Programs. (May 13, 2010)
Retrieved from http://www.lao.ca.gov/reports/2010/hlth/fed_healthcare/fed_healthcare_051310.pdf
ix
Jacobs, K., Tan, L., Graham-Squire,D. Eligibility for Medi-Cal and the Health Insurance Exchange in California under Federal Health Reform (April
2010) Retrieved from http://laborcenter.berkeley.edu/healthcare/california_exchanges10.pdf
x
Agency for Healthcare Research and Quality; Special runs from the 2008 Medical Expenditure Panel Survey – Insurance Component.
xi
Taylor, M., The 2010-11 Budget: Overview of the May Revision (May 18, 2010) Retrieved from:
http://www.lao.ca.gov/reports/2010/bud/may_revise/may_revision_051810.pdf
xii
Lifsher,M. Healthcare reform raises the stake in California insurance commissioner election. Los Angeles Times. (May 26, 2010).
Retrieved from http://www.latimes.com/news/health/healthcare/la-fi-insurance-commissioner-20100526,0,2007534.story?page=1
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