But the state’s progress in extending health coverage to all residents could come to an abrupt halt as the second Trump administration takes power alongside a Republican Congress whose leadership has long been hostile to the Affordable Care Act, the 2010 federal law also known as Obamacare.

Top of mind for Covered California officials is the looming expiration of the additional federal subsidies for health insurance approved by Congress in 2021 as part of a covid pandemic relief package. That resulted in lower premiums for people around the country — especially middle-class households — who buy health insurance through the exchanges established by the Affordable Care Act.

“Whether there will be action to extend the enhanced subsidies — that’s a big impact that we are closely tracking,” said Covered California Executive Director Jessica Altman, who noted the program had about 1.5 million enrollees prior to enhanced subsidies.

Republicans have criticized the cost of the subsidies, and it’s not clear they’ll renew them.

Without an extension, researchers at the University of California-Berkeley Labor Center estimate, Covered California premiums for subsidized enrollees by an average of $967 a year beginning in 2026, and an estimated 69,000 Californians would lose their insurance.

California took its own steps last year to make coverage more affordable, eliminating deductibles and reducing other out-of-pocket costs on all mid-tier policies known as “silver” plans.

However, the state’s health care spending is likely to face fresh pressure if Republicans in Washington follow through on long-standing designs to cut funding for Medicaid, the health insurance program for low-income Americans, known in California as Medi-Cal. In addition to bolstering Covered California, the state has also aggressively , including to immigrants living in the U.S. without authorization, and now spends $161 billion a year on that program, about half paid by the federal government.

About 144,000 of Covered California’s 1.8 million enrollees as of Dec. 14 are first-time buyers, and nearly 90% of all enrollees qualify for financial help. Covered California has extended the enrollment period to March 8 for residents in Los Angeles and Ventura counties due to wildfires, and has also issued extensions related to the bird flu and an earthquake in Northern California.

Low-income residents pay little or nothing for monthly premiums, while for those earning more, premiums are capped at a percentage of household income. With the enhanced federal subsidies, no one is required to spend more than 8.5% of their income on premiums, provided they stick to a silver plan. Such plans, however, can have smaller provider networks and significant out-of-pocket costs.

According to Covered California, the average monthly premium is $136 for those who receive subsidies, two-thirds of whom pay $10 or less a month. But people with higher incomes can end up paying significantly more. For example, a family of four making $200,000 in the Los Angeles area would pay well over $1,000 a month for a silver plan, according to a calculator for estimating costs.

While federal and state subsidies have significantly boosted the amount of assistance available, the underlying cost of insurance has continued to go up. Covered California premiums are up by 7.9% on average for 2025, but the extra subsidies shield most enrollees from the increase.

“You end up with people’s out-of-pocket spending probably being lower than we’ve seen,” said Dylan Roby, a professor of health, society, and behavior at the University of California-Irvine. “That doesn’t necessarily mean that premiums are going down. It just means that the state or federal government is paying a larger share of premiums on behalf of enrollees than before.”

Neither Trump nor incoming congressional leaders have given clear signals about how they view the future of the subsidies, but both have a history of seeking to repeal and weaken the Affordable Care Act. House Speaker Mike Johnson has vowed “massive reform” of the health care law, though without offering specifics.

Experts including Roby say Republicans could extend the subsidies to avoid an outcry from consumers, health insurers, hospitals, and others who have benefited from them. Enrollment in marketplace plans is in Republican-controlled states that have not expanded Medicaid, because it offers low-income people a way to access affordable health insurance.

“I don’t think Republican House members are that inclined to make all of their constituents’ health insurance premiums go up,” Roby said. “I’m kind of optimistic that [the subsidies] will be renewed.”

But uncertainty over the future of the subsidies, even if they eventually get renewed, could affect the cost of marketplace plans, said Rachel Linn Gish, communications director for Health Access California, a consumer advocacy coalition. That’s because insurers are already starting to plan their rates for next year and will likely price in the risk of nonrenewal, she said.

“We are going to be fighting for the next year to try to save those enhanced subsidies and subsequently all of the other frameworks and financing of the Affordable Care Act,” Linn Gish said. “Because if any of that gets rolled back, people will lose health care coverage.”

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Baackes, 78, who will retire after the end of the year, helped transform L.A. Care into a major market player following its expansion under the Affordable Care Act. He implemented a new administrative structure and promoted a new internal culture. The insurer generated $11.3 billion in revenue last year, with membership close to 2.6 million people — nearly 900,000 more than when Baackes took the reins in March 2015.

“I recognized when I got here that L.A. Care was a big frog in a big pond,” he said in an interview with ºÚÁϳԹÏÍø News on the 10th floor of L.A. Care’s downtown headquarters. But the organization still had a small-plan mentality, he said, until he convinced his staff “that we had an opportunity to really be leaders.”

Baackes moved to Los Angeles from Philadelphia, where he had headed the Medicare Advantage business of AmeriHealth Caritas VIP Care. He started at L.A. Care 15 months after the implementation of the ACA, which expanded Medicaid eligibility and created insurance exchanges where uninsured people could buy federally subsidized coverage.

L.A. Care’s Medi-Cal rolls swelled, and it offered a new health plan sold on the state’s ACA exchange, Covered California, as well as one for medically vulnerable seniors who are eligible both for Medi-Cal and Medicare.

But Baackes saw that L.A. Care didn’t have the right structure to manage the bigger organization it had become. So, he hired directors to oversee each of the health plans and revamped the chain of command.

The changes required a long period of reorientation, Baackes recalled. Then, “one of the officers came up to me one day and said, ‘Well, before I had to talk to everybody, but now I know who to talk to.’ I thought, ‘OK, phew, now we’re making progress.’”

Baackes has sometimes butted heads with state regulators, including when L.A. Care was fined in 2022 for “deep-rooted, systemic failures that threaten the health and safety of its members.” Baackes thought the fine was not justified. L.A. Care contested it and still has not paid it.

Baackes, who will retain his position as chair of Charles R. Drew University of Medicine and Science, a medical school that trains health professionals to work in underserved areas, expounded on the shortcomings and successes of the U.S. health system and Medi-Cal, which covers well over a third of California’s population.

Like many of his colleagues, he believes Medi-Cal’s principal flaw is low payments to providers, which is exacerbated by a shortage of labor in health care. That discourages doctors and other providers from taking Medi-Cal patients, limiting their choices and extending their wait times for care. He supports , a measure on the ballot this November that would secure a permanent revenue stream to increase Medi-Cal payments.

L.A. Care tackled the labor shortage by creating a $205 million fund to pay for medical school scholarships, help clinics hire doctors, and offer educational debt relief to doctors who work in safety-net settings. Jennifer Kent, former director of the California Department of Health Care Services, which oversees the Medi-Cal program, said she was impressed when Baackes used money from a rate settlement with her agency to help fund those initiatives.

“John very clearly has an appreciation and a passion for the program and what it represents in terms of the power to change people’s lives,” Kent said.

This interview with Baackes has been edited for length and clarity:

Q: Voters will decide, with their vote on Proposition 35, whether money from an industry tax will be locked into Medi-Cal permanently, curbing Gov. Gavin Newsom’s plan to tap the revenue for the state’s budget shortfall. Where do you stand on this?

I understand they’ve got a budget deficit, and they’ve got to do something about it. But we have to have security of the funding, and if it’s going to be decided in every budget, there’s going to be politics and other priorities. This is the same way education runs. They went to a ballot initiative to lock in their portion of the budget, and I think the health of over one-third of the population is as important as education.

Q: Medi-Cal has embarked on an ambitious expansion, including full coverage for all immigrants, a push to increase the amount of primary care provided, the elimination of an asset test, and continuous coverage for children up to age 5, among other things. Does the provider shortage in Medi-Cal dampen the prospects of these efforts?

Absolutely. If we are giving people expansion in access, then we have to have the resources for them to take advantage of it — unless we’re going to say, “Yeah, you have access, but figure it out on your own.” If we look at Los Angeles County, we’ve got plenty of doctors bumping into each other in places like Beverly Hills and Santa Monica. But if you go to South L.A., the Antelope Valley, it’s a different story.

Q: What do you think of the Office of Health Care Affordability’s goal of limiting annual health care spending increases to 3.5% at first, and ultimately to 3%?

Well-intended, but I do not see how it can be effective without causing a lot of damage along the way. You can restrict the amount of money that can be spent, but it doesn’t fix the underlying drivers of why it costs so much.

Q: So it could ultimately reduce care for patients?

Yeah. I think so. Because if doctors and nurses demand higher salaries and can command them because there aren’t enough people, then having an administrative hammer that you can’t spend more isn’t going to work.

Q: A lot of people would say the whole U.S. health care system, not just Medicaid, is failing patients. Access to care, and the cost of it, is difficult for a lot of people. How do we fix the system?

We need to simplify the regulatory environment. Regardless of whether it’s commercial insurance, Medicare, or Medicaid, the regulations are piling up and they cost money. The second thing: I think particularly the safety-net providers might have to say there can be no for-profit or private equity investors in that area. I’m not against capitalism. I just think if you’re going to make that money on a system that’s underfunded in the first place, something is being lost.

Q: What are your thoughts about the California Advancing and Innovating Medi-Cal program (CalAIM), especially the community supports such as meals designed for specific medical conditions, home modifications, and help finding housing?

CalAIM is a wonderful program in the sense that it begins to recognize that social determinants do influence your health. So we’re finally saying, “OK, we’ll put some money toward paying for those.” But the trade-off is that they want to reduce the medical costs by making these investments. The problem is we are trying to save dollars that are already deeply discounted. Of the 14 community supports they have, the one that is in my mind a slam dunk is the medically tailored meals.

Q: How has your thinking about health care evolved?

What I’ve learned and experienced is that health care is part of social justice, and we have to think of it that way. Any other way of thinking of it is going to create winners and losers.

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Fighting the problem presents tension for the administration: how to thwart the bad actors without affecting ACA sign-ups.

Complaints about these unauthorized changes — which can cause affected policyholders to lose access to medical care, pay higher deductibles, or even incur surprise tax bills — rose sharply in recent months, according to brokers who contacted ºÚÁϳԹÏÍø News and federal workers who asked not to be identified.

Ronnell Nolan, president and CEO of the trade association Health Agents for America, said her group has suggested to the Centers for Medicare & Medicaid Services that it add two-factor authentication to healthcare.gov or send text alerts to consumers if an agent tries to access their accounts. But the agency told her it doesn’t always have up-to-date contact information.

“We’ve given them a whole host of ideas,” she said. “They say, ‘Be careful what you wish for.’ But we don’t mind going an extra step if you can stop this fraud and abuse, because clients are being hurt.”

Some consumers are pursued when they respond to misleading social media marketing ads promising government subsidies, but most have no idea how they fell victim to plan-switching. Problems seem concentrated in the 32 states using the federal exchange.

CMS about unauthorized ACA plan switches and enrollments in the first quarter of 2024, according to the agency.

The problem is big enough that CMS says it’s working on technological and regulatory solutions. Affected consumers and agents have filed a civil lawsuit in federal district court in Florida against private-sector firms allegedly involved in unauthorized switching schemes.

Biden has pushed hard to make permanent the enhanced subsidies first put in place during the covid pandemic that, along with other steps including increased federal funding for outreach, helped fuel the strong enrollment growth. Biden for the ACA with the stance of former President Donald Trump, who supported attempts to repeal most of the law and presided over funding cuts and declining enrollment.

Most proposed solutions to the rogue-agent problem involve making it more difficult for agents to access policyholder information or requiring wider use of identity questions tied to enrollees’ credit history. The latter could be stumbling blocks for low-income people or those with limited financial records, said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University.

“That is the knife edge the administration has to walk,” said Corlette, “protecting consumers from fraudulent behavior while at the same time making sure there aren’t too many barriers.”

Jeff Wu, acting director of the Center for Consumer Information & Insurance Oversight, said in a statement that the agency is evaluating options on such factors as how effective they would be, their impact on consumers’ ability to enroll, and how fast they could be implemented.

The agency is also working closely, he wrote, with insurance companies, state insurance departments, and law enforcement “so that agents violating CMS rules or committing fraud face consequences.” And it is reaching out to states that run their own ACA markets for ideas.

That’s because Washington, D.C., and the 18 states that run their own ACA marketplaces have reported far fewer complaints about unauthorized enrollment and plan-switching. Most include layers of security in addition to those the federal marketplace has in place — some use two-factor authentication — before agents can access policyholder information.

California, for example, allows consumers to designate an agent and to “log in and add or remove an agent at will,” said Robert Kingston, interim director of outreach and sales for Covered California, the state’s ACA marketplace. The state can also send consumers a one-time passcode to share with an agent of their choice. Consumers in Colorado and Pennsylvania can similarly designate specific agents to access their accounts.

By contrast, agents can more easily access policyholder information when using private-sector websites that link them to the federal ACA market — all they need is a person’s name, date of birth, and state of residence — to enroll them or switch their coverage.

of such “enhanced direct enrollment” websites run by private companies, which are designed to make it easier and faster for agents certified to offer insurance through healthcare.gov.

last June requiring agents to get written or recorded consent from clients before enrolling them or changing their coverage, but brokers say they’re rarely asked to produce the documentation. If CMS makes changes to healthcare.gov — such as adding passcodes, as California has — it would need to require all alternative-enrollment partners to do the same.

The largest is San Francisco-based HealthSherpa, which assisted 52% of active enrollments nationally for this year, said CEO George Kalogeropoulos.

The company has a 10-person fraud investigation team, he said, which has seen “a significant spike in concerns about unauthorized switching.” They report problems to state insurance departments, insurance carriers, and federal regulators “and refer consumers to advocates on our team to make sure their plans are corrected.”

Solutions must be “targeted,” he said. “The issue with some of the solutions proposed is it negatively impacts the ability of all consumers to get enrolled.”

Most people who sign up for ACA plans are aided by agents or platforms like HealthSherpa, rather than doing it themselves or seeking help from nonprofit organizations. Brokers don’t charge consumers; instead, they receive commissions from insurers participating in state and federal marketplaces for each person they enroll in a plan.

While California officials say their additional layers of authentication have not noticeably affected enrollment numbers, the state’s recent enrollment growth than in states served by healthcare.gov.

Still, Covered California’s Kingston pointed to a decreased number of uninsured people in the state. In 2014, when much of the ACA was implemented, 12.5% of Californians were uninsured, , according to data compiled by KFF. That year, the share of people uninsured nationwide was 8%.

Corlette said insurers have a role to play, as do states and CMS.

“Are there algorithms that can say, ‘This is a broker with outlier behavior’?” Insurance companies could then withhold commissions “until they can figure it out,” she said.

Kelley Schultz, vice president of commercial policy at AHIP, the trade association for large insurance companies, said sharing more information from the government marketplace about which policies are being switched could help insurers spot patterns.

CMS could also set limits on plan switches, as there is generally no legitimate need for multiple changes in a given month, Schultz said.

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“I said, ‘What am I going to do?’” she said in Spanish, quickly getting emotional. She immediately worried she might have cancer. “I went back and forth — I have [cancer], I don’t have it, I have it, I don’t have it.” And if she was sick, she added, she wouldn’t be able to work or pay her rent. Without health insurance, Pantoja Toribio couldn’t afford to find out if she had a serious condition.

Beginning this year, , expanded to include immigrants lacking legal residency, timing that could have worked out perfectly for Pantoja Toribio, who has lived in the Bay Area city of Brentwood for three years. But her application for Medi-Cal was quickly rejected: As a farmworker earning $16 an hour, her annual income of roughly $24,000 was too high to qualify for the program.

California is the first state to expand Medicaid to all qualifying adults regardless of immigration status, a move celebrated by health advocates and political leaders across the state. But many immigrants without permanent legal status, especially those who live in parts of California where the cost of living is highest, earn slightly too much money to qualify for Medi-Cal.

The state is footing the bill for the Medi-Cal expansion, but federal law bars those it calls “undocumented” from receiving insurance subsidies or other benefits from the Affordable Care Act, leaving many employed but without viable health insurance options.

Now, the same health advocates who fought for the say the next step in achieving health equity is expanding Covered California, the state’s ACA marketplace, to all immigrant adults by passing AB 4.

“There are people in this state who work and are the backbone of so many sectors of our economy and contribute their labor and even taxes … but they are locked out of our social safety net,” said Sarah Dar, policy director at the California Immigrant Policy Center, one of two organizations sponsoring the bill, dubbed .

To qualify for Medi-Cal, an individual cannot earn more than 138% of the federal poverty level, which currently amounts to nearly $21,000 a year for a single person. A family of three would need to earn less than $35,632 a year.

For people above those thresholds, the Covered California marketplace offers various health plans, often with federal and state subsidies, yielding premiums as low as $10 a month. The hope is to create what advocates call a “mirror marketplace” on the Covered California website so that immigrants regardless of status can be offered the same health plans that would be subsidized only by the state.

Despite a Democratic supermajority in the legislature, the bill might struggle to pass, with the state facing a projected budget deficit for next year of anywhere from $38 billion to $73 billion. Gov. Gavin Newsom and legislative leaders announced a to start reducing the gap, but significant spending cuts appear inevitable.

It’s not clear how much it would cost to extend Covered California to all immigrants, according to Assembly member Joaquin Arambula, the Fresno Democrat who introduced the bill.

The immigrant policy center estimates that setting up the marketplace would cost at least $15 million. If the bill passes, sponsors would then need to secure funding for the subsidies, which could run into the billions of dollars annually.

“It is a tough time to be asking for new expenditures,” Dar said. “The mirror marketplace startup cost is a relatively very low number. So we’re hopeful that it’s still within the realm of possibility.”

Arambula said he’s optimistic the state will continue to lead in improving access to health care for immigrants who lack legal residency.

“I believe we will continue to stand up, as we are working to make this a California for all,” he said.

The bill passed the Assembly last July on a 64-9 vote and now awaits action by the Senate Appropriations Committee, Arambula’s office said.

An estimated 520,000 people in California would qualify for a Covered California plan if not for their lack of legal status, according to the labor research center at the University of California-Berkeley. Pantoja Toribio, who emigrated alone from Mexico after leaving an abusive relationship, said she was lucky. She learned about alternative health care options when she made her weekly visit to a food pantry at Hijas del Campo, a Contra Costa County farmworker advocacy organization, where they told her she might qualify for a plan for low-income people through Kaiser Permanente.

Pantoja Toribio applied just before open enrollment closed at the end of January. Through the plan, she learned that the lump in her breast was not cancerous.

“God heard me,” she said. “Thank God.”

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As states increasingly fracture along partisan lines, California Democrats are stamping their supermajority on legislation that they will consider until they adjourn at the end of August. But the cost of these proposals will be a major factor given the enormity of the state’s deficit, currently estimated at between and .

Health Coverage

Lawmakers are again considering whether to create a government-run, single-payer health care system for all Californians. is Democratic Assembly member Ash Kalra’s second such attempt, after a similar bill failed in 2022. The price tag would be enormous, though proponents say there would also be related savings. The high potential cost left Assembly Speaker Robert Rivas and others while the state faces a deficit.

would require , the state’s health insurance exchange, to offer health insurance policies to people who are otherwise not able to obtain coverage because of their immigration status, to the extent it can under federal law. That could eventually lead to similar to those .

Medical Debt

Health care providers and collection agencies would be barred from sharing patients’ medical debt with credit reporting agencies under . The bill would also prohibit credit reporting agencies from accepting, storing, or sharing any such information without consumer consent. Last year, the to develop federal rules barring unpaid medical bills from affecting patients’ credit scores. California would be to remove medical bills from consumer credit reports.

Medi-Cal

The Medi-Cal program, which provides health care for low-income people, would be required to cover medically supportive food and nutrition starting July 1, 2026, under . The bill builds on an existing but limited pilot program. The legislation says Californians of color could benefit from adequate food and nutrition to combat largely preventable chronic health conditions, and it’s sought by the California Legislative Black Caucus as part of reparations for racial injustice.

More than 1.6 million California residents, , have been kicked off Medi-Cal since the state resumed annual eligibility checks that were halted during the covid-19 pandemic. would have the state seek federal approval to slow those disenrollments by taking steps such as letting people 19 and older keep their coverage automatically for 12 months.

Violence Prevention

An increase in attacks on health workers is prompting lawmakers to consider . In California, simple assault against workers inside an ER is considered the same as simple assault against almost anyone else, and carries a maximum punishment of a $1,000 fine and six months in jail. In contrast, simple assault against emergency medical workers in the field, such as an EMT responding to a 911 call, carries maximum penalties of a $2,000 fine and a year in jail. would set the same maximum penalties for assaulting emergency health care workers on the job, whether they are in the field or an ER.

California could toughen penalties for interfering with reproductive health care services. Posting personal information or photographs of a patient or provider would be a felony if one of them is injured as a result. also boosts penalties for intimidation or obstruction.

Under , gun owners would have to lock up their weapons in state-approved safes or lockboxes where they would be inaccessible to anyone but the owner or another lawfully authorized user. Democratic Sen. Anthony Portantino, the bill’s author, says that would make it tougher for anyone, including children, to or others or use the weapons to commit crimes. Critics say it would make it harder to access the weapon when it’s needed, such as to counter a home invasion. Relatedly, and address gun violence restraining orders.

Substance Use

The has prompted several responses: would require the state’s public health department to partner with local public health agencies, wastewater treatment facilities, and others to pilot testing for traces of dangerous drugs in an effort to pinpoint drug hot spots and identify new drugs. would require workplace first-aid kits to include naloxone nasal spray, which . And senators have proposed aimed at curbing overdose deaths, particularly from the deadly synthetic opioid fentanyl.

Youth Welfare

Under , backed by a “” campaign, school districts’ sex education curricula would have to include menstrual health. There was no registered opposition.

Public schools would have to make free condoms available to all pupils in grades nine to 12 under , which would help prevent unwanted pregnancies and sexually transmitted infections, according to the author, Democratic Sen. Caroline Menjivar. Democratic last year.

Reality show star a bipartisan bill to require more reporting on the treatment of youth in state-licensed short-term residential therapeutic programs. would require the state Department of Social Services to post information on the use of restraints and seclusion rooms on a public dashboard.

California would expand its regulation of hemp products, which have become increasingly popular among youths as a way to bypass the state’s adults-only restrictions on legal cannabis. would build on that Assembly member Cecilia Aguiar-Curry said in hindsight .

Public schools would, under , generally be barred from providing food containing red dye 40, titanium dioxide, and other potentially harmful substances, which are currently used in products including . It’s Democratic Assembly member Jesse Gabriel’s to his legislation last year that attempted to ban a chemical used in Skittles.

Women’s Health

would ban the sale of menstrual products with intentionally added PFAS, also known as “.” PFAS, short for perfluoroalkyl and polyfluoroalkyl substances, have been linked to serious health problems. Newsom .

Public grade schools and community colleges would, under , have to provide 14 weeks of paid leave for pregnancies, miscarriages, childbirth, termination of pregnancies, or recovery. Newsom in 2019.

would of a 2019 law aimed at reducing the disproportionate rate of maternal mortality and other pregnant women of color.

Social Media

Social media companies could face substantial penalties if they don’t do enough to protect children, under . The measure would allow financial damages of up to $1 million for each child under age 18 who proves in court they were harmed, or three times the amount of the child’s actual damages. The industry opposes the bill, calling it .

Cyberbullies could face civil liabilities up to $75,000 under , and those damages could be sought by anyone. Under current law, damages are capped at $7,500 and may be pursued only by the state attorney general.

Wellness

Bosses could be fined for repeatedly contacting employees after working hours under , a “right to disconnect” bill patterned after similar restrictions in 13 countries. The bill’s author, Democratic Assembly member Matt Haney, said despite the advent of smartphones that “ between work and home life,” employees shouldn’t be expected to work around the clock. The measure by the California Chamber of Commerce.

Finally, Democrat Anthony Rendon, a long-serving state Assembly speaker, is spending his last year in the chamber leading a first-in-the-nation on Happiness and Public Policy Outcomes. The committee isn’t planning any legislation but after lawmakers adjourn in August.

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The state’s health insurance exchange will , up to $5,400; lower the copay of primary care visits from $50 to $35; and reduce the cost for generic drugs from $19 to $15. Some enrollees will also see their annual out-of-pocket spending capped at $6,100, down from $7,500.

Covered California CEO Jessica Altman argues these are tangible reductions — savings on deductibles and copays on top of subsidies to lower monthly premiums — that will affect hundreds of thousands of people and entice them to use their coverage.

“Deductibles uniquely detract people from seeking care, so that’s a significant focus,” Altman told ºÚÁϳԹÏÍø News. “California is really grappling with affordability and thinking about, ‘What does affordability really mean?’ Many people simply do not have $5,000 sitting in their bank account in case they need it for health care.”

Additional reductions in patients’ out-of-pocket costs — on top of existing to reduce monthly premiums — will take effect in January for people renewing or purchasing coverage during Covered California’s next enrollment period, which begins in the fall. The state could go further in helping reduce patients’ costs in subsequent years with future budget increases, Altman said.

Still, those savings may be offset by higher costs elsewhere. Covered California announced July 25 that inflation and other factors are driving up annual premium rates on participating health plans by an average of , the largest average increase since 2018.

California started fining those without health coverage in the tax year 2020, establishing its own “.” In that first year, the state raised $403 million in penalty revenue, according to the state Franchise Tax Board. It has continued to levy fines, paid for largely by low- or middle-income earners, the very people the new subsidies are intended to help.

Legislative leaders had pushed Newsom, a fellow Democrat, to funnel the tax revenue into lowering health care costs for low- and middle-income people purchasing coverage via Covered California — many of whom reported skipping or delaying care due to high out-of-pocket costs.

The governor for years resisted pleas to put penalty money into Covered California subsidies, arguing that the state couldn’t afford it and needed the money given looming economic downturns and the potential loss of federal premium subsidies — which could be threatened by a change in federal leadership.

But under ongoing pressure, Newsom relented in June and agreed to begin spending some of the money to boost state subsidies. According to the state Department of Finance, California is expected to plow $83 million next year and $165 million annually in subsequent years to expand financial assistance — roughly half the revenue it raises annually — into reducing Covered California patients’ costs. The remainder of the money will be set aside in a special health care fund that could be tapped later.

The budget deal also allows the Newsom administration to borrow up to $600 million in penalty revenue for the state general fund, which it must pay back. Penalty revenues are projected to bring in $362 million this year with an additional $366 million projected next year, according to Finance Department spokesperson H.D. Palmer.

Covered California board members approved the new plan design last week. They say the cost-sharing subsidies will lower out-of-pocket spending for nearly 700,000 people out of roughly 1.6 million enrolled in Covered California.

The boost in funding, which represents the state’s most significant effort to slash patients’ costs in Covered California, will largely benefit lower-income Californians who earn below 250% of the federal poverty level, which is for 2023, according to the exchange.

“Bringing down deductibles goes a long way to help middle-class California families struggling with increasing costs of living,” said Senate President Pro Tempore Toni Atkins, who rallied fellow Democrats to block a plan by Newsom and his administration to keep the revenue for the state general fund, which can be used for any purpose.

Atkins added, “We will continue our work to lower the costs even more in the years to come.”

Newsom spokesperson Brandon Richards defended the governor’s health care record, saying Newsom is committed to ensuring Californians can access health care. In addition to boosting assistance in Covered California, Richards said, the governor has expanded public health insurance coverage to immigrants lacking legal status and is increasing how much doctors, hospitals, and other .

Originally required by the federal Affordable Care Act, the so-called individual mandate to hold health coverage or pay a tax penalty was , eliminating the fine nationally. Newsom reinstated it for California when he took office in 2019 — a key component of his ambitious health care platform.

California is one of at least five states, along with Massachusetts, New Jersey, Rhode Island, and Vermont, as well as the District of Columbia that have their own health coverage mandate, though not all levy a tax penalty for remaining uninsured. Among them, California is most aggressively trying to lower health care costs and achieve universal coverage, said Larry Levitt, executive vice president for health policy at KFF.

“Even though they may disagree on the big picture of health care reform and single-payer, California Democrats have managed to come together and unify around these incremental steps to improve the current system,” Levitt said. “Step by step, they have put in place the pieces to get as close to universal coverage as they possibly can.”

Democratic leaders in the state have faced political blowback for not using the penalty revenue for health care, , even though Newsom and other Democrats vowed to spend the money to make health care more affordable in Covered California.

Advocates say the deal represents a win for low- and middle-income people.

“We’re excited that this money is protected for health care, and ultimately is set aside for future affordability assistance,” said Diana Douglas, chief lobbyist with the consumer advocacy group Health Access California.

Advocates want the state to tap those health care dollars to get more people covered, such as lowering health care costs for immigrants living in the state without legal permission.

A bill this year by Assembly member Joaquin Arambula, a Fresno Democrat, would require Covered California to establish a separate health insurance marketplace so that immigrants who lack legal status and earn too much to qualify for Medi-Cal, California’s version of Medicaid, can purchase comprehensive coverage that is nearly identical to plans sold on Covered California. Currently, immigrants without legal residency are not allowed on the exchange. Other states, such as Washington and Colorado, have set up similar online marketplaces.

“We’re working hard to create a system that has equal benefits and affordability assistance for everyone,” Arambula said.

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It was a tough sell for a new governor, and Newsom needed strong allies among state Democratic leaders, who at the time, in 2019, voiced concern about essentially levying a new tax on Californians unable to afford the rising cost of health care. Democrats, who, then as now, controlled the state legislature, ultimately backed Newsom in exchange for a promise: The state would levy the fine but use that money to provide financial assistance to offset out-of-pocket costs for Californians purchasing health insurance on the state exchange, Covered California.

But Newsom, now in his second term, has since backed off that promise. His administration is holding on to revenue raised from the so-called — the requirement that people have health coverage or pay a fine. And his proposed budget for the upcoming fiscal year beginning July 1, which is being debated in the state legislature, funnels the money to the state’s general fund.

That is infuriating fellow Democrats who accuse him of breaking a promise and disregarding the millions of Californians who can’t afford their deductibles and copays.

California began fining the uninsured in 2020, raising an estimated $1.1 billion over the first three years — and the Newsom administration projects it will bring in more than $700 million more over the next two years, bringing the projected five-year total to $1.8 billion, according to the state Department of Finance. Democratic leaders said Newsom’s tactic of holding back the money for the general fund is a “.”

“Money from the mandate should stay in health care,” Senate President Pro Tem Toni Atkins told ºÚÁϳԹÏÍø News, arguing the state should be distributing money now to help people afford health coverage. “I don’t know what we’re waiting for. We’ve got to figure out a way to make health care more accessible, and there’s no question that the cost of health insurance is a barrier.”

Democratic lawmakers are expected to continue ratcheting up pressure on Newsom in hopes of reaching a deal by their to pass a budget bill. “We’ve always felt that the money is meant to bring insurance costs down,” said Democratic Assembly member Phil Ting, chair of the Budget Committee.

Newsom in 2019 stumped for the individual mandate amid concerns over rising insurance premiums, vowing to reduce Covered California consumer health care costs while setting himself apart from then-President Donald Trump, who was attacking the . Congressional Republicans had gutted the federal penalty — part of the Affordable Care Act — in 2017. Newsom argued it would still work in California to lower health care costs, and to help him achieve his goal of universal health care — the centerpiece of his .

Newsom now argues that federal health insurance subsidies that offset the cost of monthly premiums are sufficient. And, in the face of a projected $32 billion state budget deficit, Newsom says California cannot afford to spend the money and further reduce out-of-pocket costs. He argues spending the money to slash deductibles, for instance, “ His proposed budget would instead keep the money for the state’s general fund, to be used for anything California wants to spend it on.

But health care advocates who lobbied in favor of the fine, as well as many Democratic lawmakers, say the funds could be lifesaving and should be distributed now.

“The individual mandate was not intended to create funds for other government programs outside of health care,” said Democratic Assembly member Jim Wood, of Santa Rosa, chair of the Assembly Health Committee, at a heated budget hearing this spring. “The clear intent of the legislature was that this money was meant to go to affordability.”

Wood said he might have rejected Newsom’s plan if he had known the revenue it generated would be deposited directly into the general fund. “I don’t think I would have supported it,” he said. “It just feels like a violation of what we thought we were doing.”

Soaring out-of-pocket health care costs, for insurance premiums and deductibles for instance, are leading people to forgo health care. In California, a staggering 52% of residents in the past year for financial reasons, according to a recent survey by the nonprofit California Health Care Foundation. (ºÚÁϳԹÏÍø News publishes California Healthline, which is an editorially independent service of the .)

Diana Douglas, a lobbyist with Health Access California, which was part of the coalition that backed the state’s coverage mandate in 2019, said Newsom must recognize soaring costs and spend the money now on affordability assistance. “This penalty money should be used to help Californians afford coverage and care.”

Health insurance plans offered by Covered California are continuing to get more expensive. Deductibles for a midtier insurance plan, for example, will jump to $5,400 next year, according to Covered California, up from $4,750 this year and just $3,700 two years ago.

And even many Californians who are purchasing coverage are putting off treatment in the face of high costs. A survey by Covered California in 2022 found that 48% of its consumers due to cost.

Newsom this spring dodged a question by ºÚÁϳԹÏÍø News about the criticism he is facing over his push to retain the mandate money, saying simply he’s “proud” to have established the state coverage mandate and noting that federal premium subsidies are available for Californians purchasing coverage via Covered California. His administration defended the push to funnel money into the general fund, saying revenues would be repaid to a special health fund and be available to use on health care eventually, if the federal government cuts back . Administration officials argue that Newsom is essentially borrowing the money and say it’ll be repaid later — though lawmakers have expressed concern that he’ll never make good on that promise.

Critics and some Democratic lawmakers say holding back the money is a double whammy for low- and middle-income residents who are struggling to pay for coverage, and argue that it amounts to a tax on the poor. “It feels like we’re trying to save it on the backs of our low-income communities,” said Democratic state Sen. Caroline Menjivar, who represents the state’s San Fernando Valley.

Democratic lawmakers this year are backing an alternative proposal, championed by Health Access California, to spend revenue from fining uninsured residents on increasing health insurance subsidies for low- and middle-income people. They would be making good on a deal advocates secured with state Democratic lawmakers last year to reduce or eliminate out-of-pocket costs in Covered California and scrap deductibles entirely for a mid-tier plan.

“We need to make sure people not only have health coverage, but that they can also afford to actually use it,” said Ronald Coleman Baeza, a health care lobbyist with the California Pan-Ethnic Health Network.

Although Newsom and his Democratic allies have passed major expansions in coverage, the state does not have universal health care. Experts say , including unauthorized immigrants who earn too much to qualify for Medi-Cal, and lawmakers are growing increasingly agitated that not all residents who are insured can afford to use their coverage.

“There was a clear commitment that these dollars were going to be used to bring down heath care costs, and we haven’t done it,” said Assembly member Pilar Schiavo, a Democrat representing the Santa Clarita Valley, who that would require any revenue raised from the individual mandate be permanently set aside for health care. Though it died this year, it can be revived next year, and advocates say they will continue pressing Newsom to distribute the existing money to Covered California consumers.

“We need to keep our promises,” Schiavo said. “If you have insurance that you can’t afford to use, or you’re afraid to go see the doctor because of how high that bill might be, then you don’t truly have access or universal coverage.”

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That changed in May, when California expanded Medi-Cal — its Medicaid program for residents with low incomes — to adults 50 and older, regardless of immigration status. The problem was that Embriz didn’t realize she would be eligible until she attended a community meeting in San Francisco.

“I’d heard that they were giving full Medi-Cal to people over 50, but I didn’t know that you didn’t have to be” in the country legally, said Embriz, who is waiting for her application to be processed. “Thank God I haven’t had any emergencies.”

As of October, the most recent month for which data is available, more than 300,000 older immigrant adults who lack legal residency benefits, 30% more than the state’s original projection. State health officials, who had based their estimate on the number of people enrolled in a limited form of Medi-Cal that covers only emergency medical services, don’t know how many additional older Californians are eligible, said Tony Cava, a spokesperson for the state Department of Health Care Services.

Now, some counties have hired a small army of community workers and health educators to enroll as many immigrant seniors as they can find. Workers visit senior centers, churches, English-language classes, immigration offices, markets, and community events, hoping to encounter people like Embriz unaware of their newfound eligibility.

In Alameda County, Medi-Cal program specialist Juan Ventanilla said the social services agency is using existing state outreach grants to partner with eight established community organizations to help get the word out about the expansion and help people sign up.

Workers, he said, specialize in “assisting the most vulnerable in the county in getting access to health care.”

Among those fanning out are Ana Hernandez and Bertha Ortega at Casa CHE, a community health education center in the Fruitvale neighborhood of Oakland that is operated by La Clínica de la Raza. Hernandez and Ortega said most people they meet are eager to enroll in Medi-Cal, but they don’t know where to start. Many don’t speak English, have limited literacy, and struggle to use or access computers. Forms are available in 12 languages, but users may not find their language, such as the Indigenous Mayan language Mam.

“The system looks friendly if you have a lot of experience using a computer,” said Ortega, but that’s not the case for most of the older adults she helps. “They come in here and we have to fix everything.”

Californians without legal status make up the largest portion of the state’s uninsured residents, estimated at 3 million by the .

To get many of them covered, state lawmakers have expanded Medi-Cal to immigrants living in California without legal authorization, rolling out the coverage in stages: First, to children in 2016, young adults up to age 26 in 2020, and seniors last year. Next year, full Medi-Cal coverage will become available to all qualified Californians, regardless of age or immigration status. Once that happens, close to ages 26 through 49 are expected to enroll, according to .

Yet for all the changes, the program’s expansion to older adults may have been the most momentous. Not only do they tend to need the most care, they also cost more to treat because they are likelier to have chronic conditions such as high blood pressure and diabetes. Many don’t regularly seek medical care or social services — a tendency exacerbated by the pandemic.

California will be the first state to expand Medicaid coverage to all immigrants. Illinois and Oregon have also expanded state-funded coverage to older adult immigrants, and New York plans to do so in 2024.

Even though Medicaid is a joint state-federal program, the federal government chips in only for emergency and pregnancy-related coverage for people without legal status, which means California taxpayers foot most of the cost of providing coverage, estimated by state budget officials at $878 million for immigrant seniors the first year.

When the expansion to seniors launched in May, people age 50 and older who were already enrolled in the limited form of Medi-Cal were automatically transitioned to the comprehensive version that offers dental, vision, long-term care, and routine medical treatment at no cost to most enrollees. And some Bay Area counties, including Alameda, Contra Costa, and San Francisco, had a leg up in identifying eligible people because they run health care programs for residents without legal status.

In recent months, community health advocates have concentrated on finding eligible seniors who have yet to hear about the expansion. Some have appeared on local television and radio news shows to get the word out.

“We know that there are more out there that are eligible but unenrolled,” said Seciah Aquino, acting executive director for the Latino Coalition for a Healthy California. “We are working to make sure that numbers can continue growing and that everyone who now has the privilege to access this benefit is able to sign up.”

A focus group study last summer, funded , found that about half of Hispanic respondents hadn’t heard about the change. An even smaller share of older Asian immigrants knew about it. Asians make up the second-largest group of California immigrants after Hispanics, who account for almost 40% of the state’s immigrants. ( is an editorially independent service of the California Health Care Foundation.)

Some of the people who remain unenrolled are hard to persuade because they fear disclosing their immigration status to a government program, community health workers report. Medi-Cal applicants are required to disclose their immigration status on the application, but state officials say they are required by law to keep the information private and don’t share it with immigration authorities.

Those assurances are often met with skepticism.

Many eligible seniors point to the Trump administration’s “public charge” policy that made enrollment in Medicaid possible grounds for denying people legal residency in the U.S. Although that policy was , fears linger.

Embriz, who had limited Medi-Cal coverage for many years, said she pulled out in 2020 because of the public charge policy. She didn’t want her Medi-Cal enrollment to ruin her chances of obtaining a green card. But once she learned that signing up wouldn’t affect her green card application, she agreed.

“It would make a big difference,” Embriz said about getting routine checkups again. “I have a lot of hope.”

For some older immigrants who have signed up, the ability to get full coverage has been a godsend. Maria Rodriguez, 56, of Hayward, learned in September that she was eligible while visiting the local Tiburcio Vasquez Health Center, a clinic that serves uninsured patients. A social worker helped her fill out the application online after a doctor had diagnosed her with diabetes and high blood pressure.

“It’s like Medi-Cal fell from heaven,” Rodriguez said. “It’s very beneficial for my health.”

Claudia Boyd-Barrett is a reporter with . This article is produced in collaboration with California Health Report, and .

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Becerril earns about $52,000 a year at a nonprofit in California’s Central Valley, putting her and her husband, Armando, at more than double the limit to qualify for Medi-Cal, the state’s Medicaid program for people with low incomes and disabilities. Private insurance would cost $1,230 a month in premiums, money needed for their mortgage.

“We’ve been resorting to home remedies to get through the pain,” Becerril said through a Spanish translator. Her husband has needed hernia surgery for 20 years. “It’s frustrating because we pay our taxes, but we can’t reap any of the benefits of where our taxes are going,” she added.

While many Californians who earn too much to be eligible for Medi-Cal can get subsidized coverage through Covered California, an estimated aren’t allowed to buy insurance through state-run insurance plans under the Affordable Care Act because they lack legal status. One Democratic lawmaker says it’s a small but glaring gap and is crafting a bill that could test Democratic Gov. Gavin Newsom’s commitment to reach universal health care.

“We’re going to need to figure out how to provide universal coverage for all who call this state home,” said the bill’s author, Assembly member Joaquin Arambula. “It’s an area our state has not leaned into enough, to provide coverage for those who are undocumented.”

Arambula’s bill would direct the state to ask the federal government to allow immigrants living in the state without authorization to get insurance through Covered California. Arambula sees the move as the critical first step to expand coverage. If approved, the Fresno lawmaker intends to push for state subsidies to help pay for insurance.

Both elements are essential for immigrants lacking legal status, said Jose Torres Casillas, a policy and legislative advocate with Health Access California, a consumer health group working with Arambula’s office on the measure.

“Access is one thing, but affordability is another,” Torres Casillas said.

Since taking office in 2019, Newsom has approved expanding Medi-Cal to regardless of immigration status. In doing so, the politician continuously rumored to be preparing for a presidential bid described the state as moving “one step closer” toward universal health care. But in January, Newsom announced a $22.5 billion state deficit and made no mention of new proposals for the state’s .

Newsom’s health secretary, Dr. Mark Ghaly, acknowledged the pressure to go further but he would not commit to a timeline.

“Up until now we’ve had so many other things to focus on,” Ghaly said. “This will become, frankly speaking, one of the most important next issues that we take on.”

California needs permission from the federal government to open Covered California to immigrants without legal residency because it is currently closed to them, and Arambula said he is in talks with Newsom administration officials about how to structure the bill.

Once the federal government opens Covered California up to all migrants, the state could set aside funding for subsidies. About 90% of enrollees in Covered California qualify for financial assistance, which is paid for with both state and federal funds. Since 2020, the state has spent $20 million a year on those subsidies, a fraction of the cost, because Congress has given states an infusion of money during the pandemic.

Previously, lawmakers had allocated roughly $300 million to lower insurance premiums for Covered California enrollees. Any financial assistance to people living in the state without authorization would likely have to come from state funds, and the costs could vary widely.

For instance, Colorado enrolled 10,000 such immigrants into a new insurance program designed solely for them at a cost of $57.8 million in state funds, said Adam Fox, deputy director of the Colorado Consumer Health Initiative. The program covered the full cost of insurance for enrollees.

In Washington state, immigrants who lack legal status can take advantage of a state fund next year to help all income-eligible state residents pay for insurance, said Michael Marchand, chief marketing officer for the Washington Health Benefit Exchange. State lawmakers have added $5 million to the fund for immigrants without legal authorization.

“It would serve as an incentive for additional undocumented immigration into our country,” said Sally Pipes, president and CEO of the Pacific Research Institute, a think tank that advocated against Medi-Cal expansion to immigrants without legal standing. “And put taxpayers on the hook for additional government health care costs and the inevitable higher tax bills to pay for them.”

California officials have previously considered allowing all immigrants to buy insurance from its state-run program before, submitting a request to the federal government in 2016. But the state rescinded its application after President Donald Trump took office, given his anti-immigration rhetoric and policies.

The Biden administration in December approved an exception to federal law for Washington state — a game changer in the eyes of immigration advocates, said Rachel Linn Gish, a spokesperson for Health Access.

“Seeing what other states have done and the waivers that are happening under Biden, it makes a huge difference in our approach,” she said.

But even if lawmakers pass a plan to open California’s insurance marketplace to all immigrants regardless of status, advocates said the state will have to wait until Jan. 1, 2024, to ask the federal government for permission, and it could take half a year or longer to get a response.

That means it could be years before Becerril can get coverage. Instead, she’s preparing for the worst.

“I’m paying for funeral coverage,” she said. “It’s more economical than paying the health coverage premium.”

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The federal government recently fixed a controversial Treasury Department rule tied to the Affordable Care Act that denied assistance to many families whose workplace coverage busted their budgets.

Because of the so-called family glitch, if a worker had access to employee-only coverage deemed affordable under federal guidelines, a spouse or dependents could not get help to buy a health plan through Covered California, the state’s ACA insurance marketplace, even if it was not affordable to put them on the employer plan.

This affected an estimated nationally, more than half of them children, since employers often contribute only to an employee’s premium, leaving workers to pay full fare for other family members.

Under a that took effect Dec. 12, if the cost of having you and your family on a workplace plan exceeds an affordability threshold — set at 9.12% of household income for 2023 — your spouse and dependents could qualify for financial aid to purchase insurance through Covered California. Affordability will be determined by how much you would have to pay to have them — and you — on your employer’s cheapest health plan.

ACA insurance subsidies come in the form of federal tax credits that can be taken upfront or settled with the IRS when you file your taxes the following year.

the UCLA Center for Health Policy Research and the UC Berkeley Labor Center show that 391,000 Californians previously excluded from subsidies in Covered California would be eligible for them under the new rule. Of those, an estimated 149,000 would likely enroll in a Covered California plan. Those switching from an employer-sponsored plan would save an average of $1,478 per person this year, according to the two centers.

“Fixing the family glitch is a critical step in really delivering on the promise of the ACA,” says Jessica Altman, executive director of Covered California. “If you don’t have affordable coverage from another source, the marketplace is where you should be able to come for affordable coverage.”

So, if you are paying too much to cover your family members on your employer’s health plan, it is definitely worth finding out whether you can get a tax credit to help pay their premiums on a Covered California plan. But finding the answer is complicated and will take considerable legwork.

If you have steady employment, last year’s income will probably be a good proxy for 2023, adding any pay raise you expect in the coming year. You’ll also need to calculate how much you would pay for your employer’s lowest-cost health plan — both for employee-only coverage and for family coverage. If the cost for you alone is under the 9.12% threshold, you will not qualify for a subsidized Covered California plan, even if your spouse and dependents do. That means a family could be split between two policies, with separate deductibles and different provider networks.

You also need to determine whether the lowest-cost plan offered by your employer meets the under the ACA. That means it must cover at least 60% of your total allowed medical expenses during the year and provide sufficient coverage for hospital and physician services. If it does not meet those requirements, you and your family might be able to get a subsidized plan through Covered California, depending on your income.

If two spouses have access to employer coverage, you’ll need to perform this exercise for both options.

Is your head spinning yet? You’re not alone.

“This stuff is just really complicated,” says Kevin Knauss, an insurance agent in Granite Bay. “And how can we possibly expect families that are doing all kinds of different things — kids, Christmas — to really focus on this stuff?”

But don’t ignore the new rule, because you could be leaving money on the table. Covered California has to help calculate your eligibility for subsidies. Your human resources department might be willing to help you fill it out. Or you could seek professional help, whether an insurance agent or other certified enroller. You wouldn’t need to pay a penny for either.

To find an insurance agent or certified enroller, log on to Covered California’s website () and click on the “Support” tab. Or call 800-300-1506. Covered California has a very useful FAQ all about the fix to the family glitch.

The enrollment period for 2023 coverage started on Nov. 1 and runs through Jan. 31. If you buy coverage this month, it will start on Feb. 1.

The family glitch fix isn’t the only new thing with Covered California. Starting this year, you can put a on your health plan, as long as they are not eligible for or enrolled in Medicare.

And, in case you missed it, Congress the supplemental tax credits that increase aid to people who were already getting some before and are available to many middle-class households that did not previously qualify for financial assistance.

The idea behind the expanded financial help is to limit the amount people spend on health care premiums to no more than 8.5% of household income, no matter how much money they make.

Knauss said he talked to a man in Marin County who was seeking a Covered California health plan for his family of four and qualified for a monthly subsidy of $1,400, even though he makes $200,000 a year. Being over 60 and living in Northern California, an expensive region, pushed his family’s premium to a level that opened the door for significant financial assistance, Knauss said.

If you are already enrolled in Covered California, don’t simply renew coverage for this year. Prices and provider networks can change from year to year, and there might be a new, cheaper option in your region. So shop around.

And whether you are new or returning to Covered California, know what your medical needs are likely to be. If you have a condition that requires intensive services, you might consider paying a higher premium in exchange for lower deductibles and coinsurance when you seek care.

Happy hunting.

Jessica Altman is the daughter of Drew Altman, who is president and CEO of KFF. KHN is an editorially independent program of KFF.

This story was produced by , which publishes , an editorially independent service of the .

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But the state’s progress in extending health coverage to all residents could come to an abrupt halt as the second Trump administration takes power alongside a Republican Congress whose leadership has long been hostile to the Affordable Care Act, the 2010 federal law also known as Obamacare.

Top of mind for Covered California officials is the looming expiration of the additional federal subsidies for health insurance approved by Congress in 2021 as part of a covid pandemic relief package. That resulted in lower premiums for people around the country — especially middle-class households — who buy health insurance through the exchanges established by the Affordable Care Act.

“Whether there will be action to extend the enhanced subsidies — that’s a big impact that we are closely tracking,” said Covered California Executive Director Jessica Altman, who noted the program had about 1.5 million enrollees prior to enhanced subsidies.

Republicans have criticized the cost of the subsidies, and it’s not clear they’ll renew them.

Without an extension, researchers at the University of California-Berkeley Labor Center estimate, Covered California premiums for subsidized enrollees by an average of $967 a year beginning in 2026, and an estimated 69,000 Californians would lose their insurance.

California took its own steps last year to make coverage more affordable, eliminating deductibles and reducing other out-of-pocket costs on all mid-tier policies known as “silver” plans.

However, the state’s health care spending is likely to face fresh pressure if Republicans in Washington follow through on long-standing designs to cut funding for Medicaid, the health insurance program for low-income Americans, known in California as Medi-Cal. In addition to bolstering Covered California, the state has also aggressively , including to immigrants living in the U.S. without authorization, and now spends $161 billion a year on that program, about half paid by the federal government.

About 144,000 of Covered California’s 1.8 million enrollees as of Dec. 14 are first-time buyers, and nearly 90% of all enrollees qualify for financial help. Covered California has extended the enrollment period to March 8 for residents in Los Angeles and Ventura counties due to wildfires, and has also issued extensions related to the bird flu and an earthquake in Northern California.

Low-income residents pay little or nothing for monthly premiums, while for those earning more, premiums are capped at a percentage of household income. With the enhanced federal subsidies, no one is required to spend more than 8.5% of their income on premiums, provided they stick to a silver plan. Such plans, however, can have smaller provider networks and significant out-of-pocket costs.

According to Covered California, the average monthly premium is $136 for those who receive subsidies, two-thirds of whom pay $10 or less a month. But people with higher incomes can end up paying significantly more. For example, a family of four making $200,000 in the Los Angeles area would pay well over $1,000 a month for a silver plan, according to a calculator for estimating costs.

While federal and state subsidies have significantly boosted the amount of assistance available, the underlying cost of insurance has continued to go up. Covered California premiums are up by 7.9% on average for 2025, but the extra subsidies shield most enrollees from the increase.

“You end up with people’s out-of-pocket spending probably being lower than we’ve seen,” said Dylan Roby, a professor of health, society, and behavior at the University of California-Irvine. “That doesn’t necessarily mean that premiums are going down. It just means that the state or federal government is paying a larger share of premiums on behalf of enrollees than before.”

Neither Trump nor incoming congressional leaders have given clear signals about how they view the future of the subsidies, but both have a history of seeking to repeal and weaken the Affordable Care Act. House Speaker Mike Johnson has vowed “massive reform” of the health care law, though without offering specifics.

Experts including Roby say Republicans could extend the subsidies to avoid an outcry from consumers, health insurers, hospitals, and others who have benefited from them. Enrollment in marketplace plans is in Republican-controlled states that have not expanded Medicaid, because it offers low-income people a way to access affordable health insurance.

“I don’t think Republican House members are that inclined to make all of their constituents’ health insurance premiums go up,” Roby said. “I’m kind of optimistic that [the subsidies] will be renewed.”

But uncertainty over the future of the subsidies, even if they eventually get renewed, could affect the cost of marketplace plans, said Rachel Linn Gish, communications director for Health Access California, a consumer advocacy coalition. That’s because insurers are already starting to plan their rates for next year and will likely price in the risk of nonrenewal, she said.

“We are going to be fighting for the next year to try to save those enhanced subsidies and subsequently all of the other frameworks and financing of the Affordable Care Act,” Linn Gish said. “Because if any of that gets rolled back, people will lose health care coverage.”

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Baackes, 78, who will retire after the end of the year, helped transform L.A. Care into a major market player following its expansion under the Affordable Care Act. He implemented a new administrative structure and promoted a new internal culture. The insurer generated $11.3 billion in revenue last year, with membership close to 2.6 million people — nearly 900,000 more than when Baackes took the reins in March 2015.

“I recognized when I got here that L.A. Care was a big frog in a big pond,” he said in an interview with ºÚÁϳԹÏÍø News on the 10th floor of L.A. Care’s downtown headquarters. But the organization still had a small-plan mentality, he said, until he convinced his staff “that we had an opportunity to really be leaders.”

Baackes moved to Los Angeles from Philadelphia, where he had headed the Medicare Advantage business of AmeriHealth Caritas VIP Care. He started at L.A. Care 15 months after the implementation of the ACA, which expanded Medicaid eligibility and created insurance exchanges where uninsured people could buy federally subsidized coverage.

L.A. Care’s Medi-Cal rolls swelled, and it offered a new health plan sold on the state’s ACA exchange, Covered California, as well as one for medically vulnerable seniors who are eligible both for Medi-Cal and Medicare.

But Baackes saw that L.A. Care didn’t have the right structure to manage the bigger organization it had become. So, he hired directors to oversee each of the health plans and revamped the chain of command.

The changes required a long period of reorientation, Baackes recalled. Then, “one of the officers came up to me one day and said, ‘Well, before I had to talk to everybody, but now I know who to talk to.’ I thought, ‘OK, phew, now we’re making progress.’”

Baackes has sometimes butted heads with state regulators, including when L.A. Care was fined in 2022 for “deep-rooted, systemic failures that threaten the health and safety of its members.” Baackes thought the fine was not justified. L.A. Care contested it and still has not paid it.

Baackes, who will retain his position as chair of Charles R. Drew University of Medicine and Science, a medical school that trains health professionals to work in underserved areas, expounded on the shortcomings and successes of the U.S. health system and Medi-Cal, which covers well over a third of California’s population.

Like many of his colleagues, he believes Medi-Cal’s principal flaw is low payments to providers, which is exacerbated by a shortage of labor in health care. That discourages doctors and other providers from taking Medi-Cal patients, limiting their choices and extending their wait times for care. He supports , a measure on the ballot this November that would secure a permanent revenue stream to increase Medi-Cal payments.

L.A. Care tackled the labor shortage by creating a $205 million fund to pay for medical school scholarships, help clinics hire doctors, and offer educational debt relief to doctors who work in safety-net settings. Jennifer Kent, former director of the California Department of Health Care Services, which oversees the Medi-Cal program, said she was impressed when Baackes used money from a rate settlement with her agency to help fund those initiatives.

“John very clearly has an appreciation and a passion for the program and what it represents in terms of the power to change people’s lives,” Kent said.

This interview with Baackes has been edited for length and clarity:

Q: Voters will decide, with their vote on Proposition 35, whether money from an industry tax will be locked into Medi-Cal permanently, curbing Gov. Gavin Newsom’s plan to tap the revenue for the state’s budget shortfall. Where do you stand on this?

I understand they’ve got a budget deficit, and they’ve got to do something about it. But we have to have security of the funding, and if it’s going to be decided in every budget, there’s going to be politics and other priorities. This is the same way education runs. They went to a ballot initiative to lock in their portion of the budget, and I think the health of over one-third of the population is as important as education.

Q: Medi-Cal has embarked on an ambitious expansion, including full coverage for all immigrants, a push to increase the amount of primary care provided, the elimination of an asset test, and continuous coverage for children up to age 5, among other things. Does the provider shortage in Medi-Cal dampen the prospects of these efforts?

Absolutely. If we are giving people expansion in access, then we have to have the resources for them to take advantage of it — unless we’re going to say, “Yeah, you have access, but figure it out on your own.” If we look at Los Angeles County, we’ve got plenty of doctors bumping into each other in places like Beverly Hills and Santa Monica. But if you go to South L.A., the Antelope Valley, it’s a different story.

Q: What do you think of the Office of Health Care Affordability’s goal of limiting annual health care spending increases to 3.5% at first, and ultimately to 3%?

Well-intended, but I do not see how it can be effective without causing a lot of damage along the way. You can restrict the amount of money that can be spent, but it doesn’t fix the underlying drivers of why it costs so much.

Q: So it could ultimately reduce care for patients?

Yeah. I think so. Because if doctors and nurses demand higher salaries and can command them because there aren’t enough people, then having an administrative hammer that you can’t spend more isn’t going to work.

Q: A lot of people would say the whole U.S. health care system, not just Medicaid, is failing patients. Access to care, and the cost of it, is difficult for a lot of people. How do we fix the system?

We need to simplify the regulatory environment. Regardless of whether it’s commercial insurance, Medicare, or Medicaid, the regulations are piling up and they cost money. The second thing: I think particularly the safety-net providers might have to say there can be no for-profit or private equity investors in that area. I’m not against capitalism. I just think if you’re going to make that money on a system that’s underfunded in the first place, something is being lost.

Q: What are your thoughts about the California Advancing and Innovating Medi-Cal program (CalAIM), especially the community supports such as meals designed for specific medical conditions, home modifications, and help finding housing?

CalAIM is a wonderful program in the sense that it begins to recognize that social determinants do influence your health. So we’re finally saying, “OK, we’ll put some money toward paying for those.” But the trade-off is that they want to reduce the medical costs by making these investments. The problem is we are trying to save dollars that are already deeply discounted. Of the 14 community supports they have, the one that is in my mind a slam dunk is the medically tailored meals.

Q: How has your thinking about health care evolved?

What I’ve learned and experienced is that health care is part of social justice, and we have to think of it that way. Any other way of thinking of it is going to create winners and losers.

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Fighting the problem presents tension for the administration: how to thwart the bad actors without affecting ACA sign-ups.

Complaints about these unauthorized changes — which can cause affected policyholders to lose access to medical care, pay higher deductibles, or even incur surprise tax bills — rose sharply in recent months, according to brokers who contacted ºÚÁϳԹÏÍø News and federal workers who asked not to be identified.

Ronnell Nolan, president and CEO of the trade association Health Agents for America, said her group has suggested to the Centers for Medicare & Medicaid Services that it add two-factor authentication to healthcare.gov or send text alerts to consumers if an agent tries to access their accounts. But the agency told her it doesn’t always have up-to-date contact information.

“We’ve given them a whole host of ideas,” she said. “They say, ‘Be careful what you wish for.’ But we don’t mind going an extra step if you can stop this fraud and abuse, because clients are being hurt.”

Some consumers are pursued when they respond to misleading social media marketing ads promising government subsidies, but most have no idea how they fell victim to plan-switching. Problems seem concentrated in the 32 states using the federal exchange.

CMS about unauthorized ACA plan switches and enrollments in the first quarter of 2024, according to the agency.

The problem is big enough that CMS says it’s working on technological and regulatory solutions. Affected consumers and agents have filed a civil lawsuit in federal district court in Florida against private-sector firms allegedly involved in unauthorized switching schemes.

Biden has pushed hard to make permanent the enhanced subsidies first put in place during the covid pandemic that, along with other steps including increased federal funding for outreach, helped fuel the strong enrollment growth. Biden for the ACA with the stance of former President Donald Trump, who supported attempts to repeal most of the law and presided over funding cuts and declining enrollment.

Most proposed solutions to the rogue-agent problem involve making it more difficult for agents to access policyholder information or requiring wider use of identity questions tied to enrollees’ credit history. The latter could be stumbling blocks for low-income people or those with limited financial records, said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University.

“That is the knife edge the administration has to walk,” said Corlette, “protecting consumers from fraudulent behavior while at the same time making sure there aren’t too many barriers.”

Jeff Wu, acting director of the Center for Consumer Information & Insurance Oversight, said in a statement that the agency is evaluating options on such factors as how effective they would be, their impact on consumers’ ability to enroll, and how fast they could be implemented.

The agency is also working closely, he wrote, with insurance companies, state insurance departments, and law enforcement “so that agents violating CMS rules or committing fraud face consequences.” And it is reaching out to states that run their own ACA markets for ideas.

That’s because Washington, D.C., and the 18 states that run their own ACA marketplaces have reported far fewer complaints about unauthorized enrollment and plan-switching. Most include layers of security in addition to those the federal marketplace has in place — some use two-factor authentication — before agents can access policyholder information.

California, for example, allows consumers to designate an agent and to “log in and add or remove an agent at will,” said Robert Kingston, interim director of outreach and sales for Covered California, the state’s ACA marketplace. The state can also send consumers a one-time passcode to share with an agent of their choice. Consumers in Colorado and Pennsylvania can similarly designate specific agents to access their accounts.

By contrast, agents can more easily access policyholder information when using private-sector websites that link them to the federal ACA market — all they need is a person’s name, date of birth, and state of residence — to enroll them or switch their coverage.

of such “enhanced direct enrollment” websites run by private companies, which are designed to make it easier and faster for agents certified to offer insurance through healthcare.gov.

last June requiring agents to get written or recorded consent from clients before enrolling them or changing their coverage, but brokers say they’re rarely asked to produce the documentation. If CMS makes changes to healthcare.gov — such as adding passcodes, as California has — it would need to require all alternative-enrollment partners to do the same.

The largest is San Francisco-based HealthSherpa, which assisted 52% of active enrollments nationally for this year, said CEO George Kalogeropoulos.

The company has a 10-person fraud investigation team, he said, which has seen “a significant spike in concerns about unauthorized switching.” They report problems to state insurance departments, insurance carriers, and federal regulators “and refer consumers to advocates on our team to make sure their plans are corrected.”

Solutions must be “targeted,” he said. “The issue with some of the solutions proposed is it negatively impacts the ability of all consumers to get enrolled.”

Most people who sign up for ACA plans are aided by agents or platforms like HealthSherpa, rather than doing it themselves or seeking help from nonprofit organizations. Brokers don’t charge consumers; instead, they receive commissions from insurers participating in state and federal marketplaces for each person they enroll in a plan.

While California officials say their additional layers of authentication have not noticeably affected enrollment numbers, the state’s recent enrollment growth than in states served by healthcare.gov.

Still, Covered California’s Kingston pointed to a decreased number of uninsured people in the state. In 2014, when much of the ACA was implemented, 12.5% of Californians were uninsured, , according to data compiled by KFF. That year, the share of people uninsured nationwide was 8%.

Corlette said insurers have a role to play, as do states and CMS.

“Are there algorithms that can say, ‘This is a broker with outlier behavior’?” Insurance companies could then withhold commissions “until they can figure it out,” she said.

Kelley Schultz, vice president of commercial policy at AHIP, the trade association for large insurance companies, said sharing more information from the government marketplace about which policies are being switched could help insurers spot patterns.

CMS could also set limits on plan switches, as there is generally no legitimate need for multiple changes in a given month, Schultz said.

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“I said, ‘What am I going to do?’” she said in Spanish, quickly getting emotional. She immediately worried she might have cancer. “I went back and forth — I have [cancer], I don’t have it, I have it, I don’t have it.” And if she was sick, she added, she wouldn’t be able to work or pay her rent. Without health insurance, Pantoja Toribio couldn’t afford to find out if she had a serious condition.

Beginning this year, , expanded to include immigrants lacking legal residency, timing that could have worked out perfectly for Pantoja Toribio, who has lived in the Bay Area city of Brentwood for three years. But her application for Medi-Cal was quickly rejected: As a farmworker earning $16 an hour, her annual income of roughly $24,000 was too high to qualify for the program.

California is the first state to expand Medicaid to all qualifying adults regardless of immigration status, a move celebrated by health advocates and political leaders across the state. But many immigrants without permanent legal status, especially those who live in parts of California where the cost of living is highest, earn slightly too much money to qualify for Medi-Cal.

The state is footing the bill for the Medi-Cal expansion, but federal law bars those it calls “undocumented” from receiving insurance subsidies or other benefits from the Affordable Care Act, leaving many employed but without viable health insurance options.

Now, the same health advocates who fought for the say the next step in achieving health equity is expanding Covered California, the state’s ACA marketplace, to all immigrant adults by passing AB 4.

“There are people in this state who work and are the backbone of so many sectors of our economy and contribute their labor and even taxes … but they are locked out of our social safety net,” said Sarah Dar, policy director at the California Immigrant Policy Center, one of two organizations sponsoring the bill, dubbed .

To qualify for Medi-Cal, an individual cannot earn more than 138% of the federal poverty level, which currently amounts to nearly $21,000 a year for a single person. A family of three would need to earn less than $35,632 a year.

For people above those thresholds, the Covered California marketplace offers various health plans, often with federal and state subsidies, yielding premiums as low as $10 a month. The hope is to create what advocates call a “mirror marketplace” on the Covered California website so that immigrants regardless of status can be offered the same health plans that would be subsidized only by the state.

Despite a Democratic supermajority in the legislature, the bill might struggle to pass, with the state facing a projected budget deficit for next year of anywhere from $38 billion to $73 billion. Gov. Gavin Newsom and legislative leaders announced a to start reducing the gap, but significant spending cuts appear inevitable.

It’s not clear how much it would cost to extend Covered California to all immigrants, according to Assembly member Joaquin Arambula, the Fresno Democrat who introduced the bill.

The immigrant policy center estimates that setting up the marketplace would cost at least $15 million. If the bill passes, sponsors would then need to secure funding for the subsidies, which could run into the billions of dollars annually.

“It is a tough time to be asking for new expenditures,” Dar said. “The mirror marketplace startup cost is a relatively very low number. So we’re hopeful that it’s still within the realm of possibility.”

Arambula said he’s optimistic the state will continue to lead in improving access to health care for immigrants who lack legal residency.

“I believe we will continue to stand up, as we are working to make this a California for all,” he said.

The bill passed the Assembly last July on a 64-9 vote and now awaits action by the Senate Appropriations Committee, Arambula’s office said.

An estimated 520,000 people in California would qualify for a Covered California plan if not for their lack of legal status, according to the labor research center at the University of California-Berkeley. Pantoja Toribio, who emigrated alone from Mexico after leaving an abusive relationship, said she was lucky. She learned about alternative health care options when she made her weekly visit to a food pantry at Hijas del Campo, a Contra Costa County farmworker advocacy organization, where they told her she might qualify for a plan for low-income people through Kaiser Permanente.

Pantoja Toribio applied just before open enrollment closed at the end of January. Through the plan, she learned that the lump in her breast was not cancerous.

“God heard me,” she said. “Thank God.”

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As states increasingly fracture along partisan lines, California Democrats are stamping their supermajority on legislation that they will consider until they adjourn at the end of August. But the cost of these proposals will be a major factor given the enormity of the state’s deficit, currently estimated at between and .

Health Coverage

Lawmakers are again considering whether to create a government-run, single-payer health care system for all Californians. is Democratic Assembly member Ash Kalra’s second such attempt, after a similar bill failed in 2022. The price tag would be enormous, though proponents say there would also be related savings. The high potential cost left Assembly Speaker Robert Rivas and others while the state faces a deficit.

would require , the state’s health insurance exchange, to offer health insurance policies to people who are otherwise not able to obtain coverage because of their immigration status, to the extent it can under federal law. That could eventually lead to similar to those .

Medical Debt

Health care providers and collection agencies would be barred from sharing patients’ medical debt with credit reporting agencies under . The bill would also prohibit credit reporting agencies from accepting, storing, or sharing any such information without consumer consent. Last year, the to develop federal rules barring unpaid medical bills from affecting patients’ credit scores. California would be to remove medical bills from consumer credit reports.

Medi-Cal

The Medi-Cal program, which provides health care for low-income people, would be required to cover medically supportive food and nutrition starting July 1, 2026, under . The bill builds on an existing but limited pilot program. The legislation says Californians of color could benefit from adequate food and nutrition to combat largely preventable chronic health conditions, and it’s sought by the California Legislative Black Caucus as part of reparations for racial injustice.

More than 1.6 million California residents, , have been kicked off Medi-Cal since the state resumed annual eligibility checks that were halted during the covid-19 pandemic. would have the state seek federal approval to slow those disenrollments by taking steps such as letting people 19 and older keep their coverage automatically for 12 months.

Violence Prevention

An increase in attacks on health workers is prompting lawmakers to consider . In California, simple assault against workers inside an ER is considered the same as simple assault against almost anyone else, and carries a maximum punishment of a $1,000 fine and six months in jail. In contrast, simple assault against emergency medical workers in the field, such as an EMT responding to a 911 call, carries maximum penalties of a $2,000 fine and a year in jail. would set the same maximum penalties for assaulting emergency health care workers on the job, whether they are in the field or an ER.

California could toughen penalties for interfering with reproductive health care services. Posting personal information or photographs of a patient or provider would be a felony if one of them is injured as a result. also boosts penalties for intimidation or obstruction.

Under , gun owners would have to lock up their weapons in state-approved safes or lockboxes where they would be inaccessible to anyone but the owner or another lawfully authorized user. Democratic Sen. Anthony Portantino, the bill’s author, says that would make it tougher for anyone, including children, to or others or use the weapons to commit crimes. Critics say it would make it harder to access the weapon when it’s needed, such as to counter a home invasion. Relatedly, and address gun violence restraining orders.

Substance Use

The has prompted several responses: would require the state’s public health department to partner with local public health agencies, wastewater treatment facilities, and others to pilot testing for traces of dangerous drugs in an effort to pinpoint drug hot spots and identify new drugs. would require workplace first-aid kits to include naloxone nasal spray, which . And senators have proposed aimed at curbing overdose deaths, particularly from the deadly synthetic opioid fentanyl.

Youth Welfare

Under , backed by a “” campaign, school districts’ sex education curricula would have to include menstrual health. There was no registered opposition.

Public schools would have to make free condoms available to all pupils in grades nine to 12 under , which would help prevent unwanted pregnancies and sexually transmitted infections, according to the author, Democratic Sen. Caroline Menjivar. Democratic last year.

Reality show star a bipartisan bill to require more reporting on the treatment of youth in state-licensed short-term residential therapeutic programs. would require the state Department of Social Services to post information on the use of restraints and seclusion rooms on a public dashboard.

California would expand its regulation of hemp products, which have become increasingly popular among youths as a way to bypass the state’s adults-only restrictions on legal cannabis. would build on that Assembly member Cecilia Aguiar-Curry said in hindsight .

Public schools would, under , generally be barred from providing food containing red dye 40, titanium dioxide, and other potentially harmful substances, which are currently used in products including . It’s Democratic Assembly member Jesse Gabriel’s to his legislation last year that attempted to ban a chemical used in Skittles.

Women’s Health

would ban the sale of menstrual products with intentionally added PFAS, also known as “.” PFAS, short for perfluoroalkyl and polyfluoroalkyl substances, have been linked to serious health problems. Newsom .

Public grade schools and community colleges would, under , have to provide 14 weeks of paid leave for pregnancies, miscarriages, childbirth, termination of pregnancies, or recovery. Newsom in 2019.

would of a 2019 law aimed at reducing the disproportionate rate of maternal mortality and other pregnant women of color.

Social Media

Social media companies could face substantial penalties if they don’t do enough to protect children, under . The measure would allow financial damages of up to $1 million for each child under age 18 who proves in court they were harmed, or three times the amount of the child’s actual damages. The industry opposes the bill, calling it .

Cyberbullies could face civil liabilities up to $75,000 under , and those damages could be sought by anyone. Under current law, damages are capped at $7,500 and may be pursued only by the state attorney general.

Wellness

Bosses could be fined for repeatedly contacting employees after working hours under , a “right to disconnect” bill patterned after similar restrictions in 13 countries. The bill’s author, Democratic Assembly member Matt Haney, said despite the advent of smartphones that “ between work and home life,” employees shouldn’t be expected to work around the clock. The measure by the California Chamber of Commerce.

Finally, Democrat Anthony Rendon, a long-serving state Assembly speaker, is spending his last year in the chamber leading a first-in-the-nation on Happiness and Public Policy Outcomes. The committee isn’t planning any legislation but after lawmakers adjourn in August.

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The state’s health insurance exchange will , up to $5,400; lower the copay of primary care visits from $50 to $35; and reduce the cost for generic drugs from $19 to $15. Some enrollees will also see their annual out-of-pocket spending capped at $6,100, down from $7,500.

Covered California CEO Jessica Altman argues these are tangible reductions — savings on deductibles and copays on top of subsidies to lower monthly premiums — that will affect hundreds of thousands of people and entice them to use their coverage.

“Deductibles uniquely detract people from seeking care, so that’s a significant focus,” Altman told ºÚÁϳԹÏÍø News. “California is really grappling with affordability and thinking about, ‘What does affordability really mean?’ Many people simply do not have $5,000 sitting in their bank account in case they need it for health care.”

Additional reductions in patients’ out-of-pocket costs — on top of existing to reduce monthly premiums — will take effect in January for people renewing or purchasing coverage during Covered California’s next enrollment period, which begins in the fall. The state could go further in helping reduce patients’ costs in subsequent years with future budget increases, Altman said.

Still, those savings may be offset by higher costs elsewhere. Covered California announced July 25 that inflation and other factors are driving up annual premium rates on participating health plans by an average of , the largest average increase since 2018.

California started fining those without health coverage in the tax year 2020, establishing its own “.” In that first year, the state raised $403 million in penalty revenue, according to the state Franchise Tax Board. It has continued to levy fines, paid for largely by low- or middle-income earners, the very people the new subsidies are intended to help.

Legislative leaders had pushed Newsom, a fellow Democrat, to funnel the tax revenue into lowering health care costs for low- and middle-income people purchasing coverage via Covered California — many of whom reported skipping or delaying care due to high out-of-pocket costs.

The governor for years resisted pleas to put penalty money into Covered California subsidies, arguing that the state couldn’t afford it and needed the money given looming economic downturns and the potential loss of federal premium subsidies — which could be threatened by a change in federal leadership.

But under ongoing pressure, Newsom relented in June and agreed to begin spending some of the money to boost state subsidies. According to the state Department of Finance, California is expected to plow $83 million next year and $165 million annually in subsequent years to expand financial assistance — roughly half the revenue it raises annually — into reducing Covered California patients’ costs. The remainder of the money will be set aside in a special health care fund that could be tapped later.

The budget deal also allows the Newsom administration to borrow up to $600 million in penalty revenue for the state general fund, which it must pay back. Penalty revenues are projected to bring in $362 million this year with an additional $366 million projected next year, according to Finance Department spokesperson H.D. Palmer.

Covered California board members approved the new plan design last week. They say the cost-sharing subsidies will lower out-of-pocket spending for nearly 700,000 people out of roughly 1.6 million enrolled in Covered California.

The boost in funding, which represents the state’s most significant effort to slash patients’ costs in Covered California, will largely benefit lower-income Californians who earn below 250% of the federal poverty level, which is for 2023, according to the exchange.

“Bringing down deductibles goes a long way to help middle-class California families struggling with increasing costs of living,” said Senate President Pro Tempore Toni Atkins, who rallied fellow Democrats to block a plan by Newsom and his administration to keep the revenue for the state general fund, which can be used for any purpose.

Atkins added, “We will continue our work to lower the costs even more in the years to come.”

Newsom spokesperson Brandon Richards defended the governor’s health care record, saying Newsom is committed to ensuring Californians can access health care. In addition to boosting assistance in Covered California, Richards said, the governor has expanded public health insurance coverage to immigrants lacking legal status and is increasing how much doctors, hospitals, and other .

Originally required by the federal Affordable Care Act, the so-called individual mandate to hold health coverage or pay a tax penalty was , eliminating the fine nationally. Newsom reinstated it for California when he took office in 2019 — a key component of his ambitious health care platform.

California is one of at least five states, along with Massachusetts, New Jersey, Rhode Island, and Vermont, as well as the District of Columbia that have their own health coverage mandate, though not all levy a tax penalty for remaining uninsured. Among them, California is most aggressively trying to lower health care costs and achieve universal coverage, said Larry Levitt, executive vice president for health policy at KFF.

“Even though they may disagree on the big picture of health care reform and single-payer, California Democrats have managed to come together and unify around these incremental steps to improve the current system,” Levitt said. “Step by step, they have put in place the pieces to get as close to universal coverage as they possibly can.”

Democratic leaders in the state have faced political blowback for not using the penalty revenue for health care, , even though Newsom and other Democrats vowed to spend the money to make health care more affordable in Covered California.

Advocates say the deal represents a win for low- and middle-income people.

“We’re excited that this money is protected for health care, and ultimately is set aside for future affordability assistance,” said Diana Douglas, chief lobbyist with the consumer advocacy group Health Access California.

Advocates want the state to tap those health care dollars to get more people covered, such as lowering health care costs for immigrants living in the state without legal permission.

A bill this year by Assembly member Joaquin Arambula, a Fresno Democrat, would require Covered California to establish a separate health insurance marketplace so that immigrants who lack legal status and earn too much to qualify for Medi-Cal, California’s version of Medicaid, can purchase comprehensive coverage that is nearly identical to plans sold on Covered California. Currently, immigrants without legal residency are not allowed on the exchange. Other states, such as Washington and Colorado, have set up similar online marketplaces.

“We’re working hard to create a system that has equal benefits and affordability assistance for everyone,” Arambula said.

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It was a tough sell for a new governor, and Newsom needed strong allies among state Democratic leaders, who at the time, in 2019, voiced concern about essentially levying a new tax on Californians unable to afford the rising cost of health care. Democrats, who, then as now, controlled the state legislature, ultimately backed Newsom in exchange for a promise: The state would levy the fine but use that money to provide financial assistance to offset out-of-pocket costs for Californians purchasing health insurance on the state exchange, Covered California.

But Newsom, now in his second term, has since backed off that promise. His administration is holding on to revenue raised from the so-called — the requirement that people have health coverage or pay a fine. And his proposed budget for the upcoming fiscal year beginning July 1, which is being debated in the state legislature, funnels the money to the state’s general fund.

That is infuriating fellow Democrats who accuse him of breaking a promise and disregarding the millions of Californians who can’t afford their deductibles and copays.

California began fining the uninsured in 2020, raising an estimated $1.1 billion over the first three years — and the Newsom administration projects it will bring in more than $700 million more over the next two years, bringing the projected five-year total to $1.8 billion, according to the state Department of Finance. Democratic leaders said Newsom’s tactic of holding back the money for the general fund is a “.”

“Money from the mandate should stay in health care,” Senate President Pro Tem Toni Atkins told ºÚÁϳԹÏÍø News, arguing the state should be distributing money now to help people afford health coverage. “I don’t know what we’re waiting for. We’ve got to figure out a way to make health care more accessible, and there’s no question that the cost of health insurance is a barrier.”

Democratic lawmakers are expected to continue ratcheting up pressure on Newsom in hopes of reaching a deal by their to pass a budget bill. “We’ve always felt that the money is meant to bring insurance costs down,” said Democratic Assembly member Phil Ting, chair of the Budget Committee.

Newsom in 2019 stumped for the individual mandate amid concerns over rising insurance premiums, vowing to reduce Covered California consumer health care costs while setting himself apart from then-President Donald Trump, who was attacking the . Congressional Republicans had gutted the federal penalty — part of the Affordable Care Act — in 2017. Newsom argued it would still work in California to lower health care costs, and to help him achieve his goal of universal health care — the centerpiece of his .

Newsom now argues that federal health insurance subsidies that offset the cost of monthly premiums are sufficient. And, in the face of a projected $32 billion state budget deficit, Newsom says California cannot afford to spend the money and further reduce out-of-pocket costs. He argues spending the money to slash deductibles, for instance, “ His proposed budget would instead keep the money for the state’s general fund, to be used for anything California wants to spend it on.

But health care advocates who lobbied in favor of the fine, as well as many Democratic lawmakers, say the funds could be lifesaving and should be distributed now.

“The individual mandate was not intended to create funds for other government programs outside of health care,” said Democratic Assembly member Jim Wood, of Santa Rosa, chair of the Assembly Health Committee, at a heated budget hearing this spring. “The clear intent of the legislature was that this money was meant to go to affordability.”

Wood said he might have rejected Newsom’s plan if he had known the revenue it generated would be deposited directly into the general fund. “I don’t think I would have supported it,” he said. “It just feels like a violation of what we thought we were doing.”

Soaring out-of-pocket health care costs, for insurance premiums and deductibles for instance, are leading people to forgo health care. In California, a staggering 52% of residents in the past year for financial reasons, according to a recent survey by the nonprofit California Health Care Foundation. (ºÚÁϳԹÏÍø News publishes California Healthline, which is an editorially independent service of the .)

Diana Douglas, a lobbyist with Health Access California, which was part of the coalition that backed the state’s coverage mandate in 2019, said Newsom must recognize soaring costs and spend the money now on affordability assistance. “This penalty money should be used to help Californians afford coverage and care.”

Health insurance plans offered by Covered California are continuing to get more expensive. Deductibles for a midtier insurance plan, for example, will jump to $5,400 next year, according to Covered California, up from $4,750 this year and just $3,700 two years ago.

And even many Californians who are purchasing coverage are putting off treatment in the face of high costs. A survey by Covered California in 2022 found that 48% of its consumers due to cost.

Newsom this spring dodged a question by ºÚÁϳԹÏÍø News about the criticism he is facing over his push to retain the mandate money, saying simply he’s “proud” to have established the state coverage mandate and noting that federal premium subsidies are available for Californians purchasing coverage via Covered California. His administration defended the push to funnel money into the general fund, saying revenues would be repaid to a special health fund and be available to use on health care eventually, if the federal government cuts back . Administration officials argue that Newsom is essentially borrowing the money and say it’ll be repaid later — though lawmakers have expressed concern that he’ll never make good on that promise.

Critics and some Democratic lawmakers say holding back the money is a double whammy for low- and middle-income residents who are struggling to pay for coverage, and argue that it amounts to a tax on the poor. “It feels like we’re trying to save it on the backs of our low-income communities,” said Democratic state Sen. Caroline Menjivar, who represents the state’s San Fernando Valley.

Democratic lawmakers this year are backing an alternative proposal, championed by Health Access California, to spend revenue from fining uninsured residents on increasing health insurance subsidies for low- and middle-income people. They would be making good on a deal advocates secured with state Democratic lawmakers last year to reduce or eliminate out-of-pocket costs in Covered California and scrap deductibles entirely for a mid-tier plan.

“We need to make sure people not only have health coverage, but that they can also afford to actually use it,” said Ronald Coleman Baeza, a health care lobbyist with the California Pan-Ethnic Health Network.

Although Newsom and his Democratic allies have passed major expansions in coverage, the state does not have universal health care. Experts say , including unauthorized immigrants who earn too much to qualify for Medi-Cal, and lawmakers are growing increasingly agitated that not all residents who are insured can afford to use their coverage.

“There was a clear commitment that these dollars were going to be used to bring down heath care costs, and we haven’t done it,” said Assembly member Pilar Schiavo, a Democrat representing the Santa Clarita Valley, who that would require any revenue raised from the individual mandate be permanently set aside for health care. Though it died this year, it can be revived next year, and advocates say they will continue pressing Newsom to distribute the existing money to Covered California consumers.

“We need to keep our promises,” Schiavo said. “If you have insurance that you can’t afford to use, or you’re afraid to go see the doctor because of how high that bill might be, then you don’t truly have access or universal coverage.”

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That changed in May, when California expanded Medi-Cal — its Medicaid program for residents with low incomes — to adults 50 and older, regardless of immigration status. The problem was that Embriz didn’t realize she would be eligible until she attended a community meeting in San Francisco.

“I’d heard that they were giving full Medi-Cal to people over 50, but I didn’t know that you didn’t have to be” in the country legally, said Embriz, who is waiting for her application to be processed. “Thank God I haven’t had any emergencies.”

As of October, the most recent month for which data is available, more than 300,000 older immigrant adults who lack legal residency benefits, 30% more than the state’s original projection. State health officials, who had based their estimate on the number of people enrolled in a limited form of Medi-Cal that covers only emergency medical services, don’t know how many additional older Californians are eligible, said Tony Cava, a spokesperson for the state Department of Health Care Services.

Now, some counties have hired a small army of community workers and health educators to enroll as many immigrant seniors as they can find. Workers visit senior centers, churches, English-language classes, immigration offices, markets, and community events, hoping to encounter people like Embriz unaware of their newfound eligibility.

In Alameda County, Medi-Cal program specialist Juan Ventanilla said the social services agency is using existing state outreach grants to partner with eight established community organizations to help get the word out about the expansion and help people sign up.

Workers, he said, specialize in “assisting the most vulnerable in the county in getting access to health care.”

Among those fanning out are Ana Hernandez and Bertha Ortega at Casa CHE, a community health education center in the Fruitvale neighborhood of Oakland that is operated by La Clínica de la Raza. Hernandez and Ortega said most people they meet are eager to enroll in Medi-Cal, but they don’t know where to start. Many don’t speak English, have limited literacy, and struggle to use or access computers. Forms are available in 12 languages, but users may not find their language, such as the Indigenous Mayan language Mam.

“The system looks friendly if you have a lot of experience using a computer,” said Ortega, but that’s not the case for most of the older adults she helps. “They come in here and we have to fix everything.”

Californians without legal status make up the largest portion of the state’s uninsured residents, estimated at 3 million by the .

To get many of them covered, state lawmakers have expanded Medi-Cal to immigrants living in California without legal authorization, rolling out the coverage in stages: First, to children in 2016, young adults up to age 26 in 2020, and seniors last year. Next year, full Medi-Cal coverage will become available to all qualified Californians, regardless of age or immigration status. Once that happens, close to ages 26 through 49 are expected to enroll, according to .

Yet for all the changes, the program’s expansion to older adults may have been the most momentous. Not only do they tend to need the most care, they also cost more to treat because they are likelier to have chronic conditions such as high blood pressure and diabetes. Many don’t regularly seek medical care or social services — a tendency exacerbated by the pandemic.

California will be the first state to expand Medicaid coverage to all immigrants. Illinois and Oregon have also expanded state-funded coverage to older adult immigrants, and New York plans to do so in 2024.

Even though Medicaid is a joint state-federal program, the federal government chips in only for emergency and pregnancy-related coverage for people without legal status, which means California taxpayers foot most of the cost of providing coverage, estimated by state budget officials at $878 million for immigrant seniors the first year.

When the expansion to seniors launched in May, people age 50 and older who were already enrolled in the limited form of Medi-Cal were automatically transitioned to the comprehensive version that offers dental, vision, long-term care, and routine medical treatment at no cost to most enrollees. And some Bay Area counties, including Alameda, Contra Costa, and San Francisco, had a leg up in identifying eligible people because they run health care programs for residents without legal status.

In recent months, community health advocates have concentrated on finding eligible seniors who have yet to hear about the expansion. Some have appeared on local television and radio news shows to get the word out.

“We know that there are more out there that are eligible but unenrolled,” said Seciah Aquino, acting executive director for the Latino Coalition for a Healthy California. “We are working to make sure that numbers can continue growing and that everyone who now has the privilege to access this benefit is able to sign up.”

A focus group study last summer, funded , found that about half of Hispanic respondents hadn’t heard about the change. An even smaller share of older Asian immigrants knew about it. Asians make up the second-largest group of California immigrants after Hispanics, who account for almost 40% of the state’s immigrants. ( is an editorially independent service of the California Health Care Foundation.)

Some of the people who remain unenrolled are hard to persuade because they fear disclosing their immigration status to a government program, community health workers report. Medi-Cal applicants are required to disclose their immigration status on the application, but state officials say they are required by law to keep the information private and don’t share it with immigration authorities.

Those assurances are often met with skepticism.

Many eligible seniors point to the Trump administration’s “public charge” policy that made enrollment in Medicaid possible grounds for denying people legal residency in the U.S. Although that policy was , fears linger.

Embriz, who had limited Medi-Cal coverage for many years, said she pulled out in 2020 because of the public charge policy. She didn’t want her Medi-Cal enrollment to ruin her chances of obtaining a green card. But once she learned that signing up wouldn’t affect her green card application, she agreed.

“It would make a big difference,” Embriz said about getting routine checkups again. “I have a lot of hope.”

For some older immigrants who have signed up, the ability to get full coverage has been a godsend. Maria Rodriguez, 56, of Hayward, learned in September that she was eligible while visiting the local Tiburcio Vasquez Health Center, a clinic that serves uninsured patients. A social worker helped her fill out the application online after a doctor had diagnosed her with diabetes and high blood pressure.

“It’s like Medi-Cal fell from heaven,” Rodriguez said. “It’s very beneficial for my health.”

Claudia Boyd-Barrett is a reporter with . This article is produced in collaboration with California Health Report, and .

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Becerril earns about $52,000 a year at a nonprofit in California’s Central Valley, putting her and her husband, Armando, at more than double the limit to qualify for Medi-Cal, the state’s Medicaid program for people with low incomes and disabilities. Private insurance would cost $1,230 a month in premiums, money needed for their mortgage.

“We’ve been resorting to home remedies to get through the pain,” Becerril said through a Spanish translator. Her husband has needed hernia surgery for 20 years. “It’s frustrating because we pay our taxes, but we can’t reap any of the benefits of where our taxes are going,” she added.

While many Californians who earn too much to be eligible for Medi-Cal can get subsidized coverage through Covered California, an estimated aren’t allowed to buy insurance through state-run insurance plans under the Affordable Care Act because they lack legal status. One Democratic lawmaker says it’s a small but glaring gap and is crafting a bill that could test Democratic Gov. Gavin Newsom’s commitment to reach universal health care.

“We’re going to need to figure out how to provide universal coverage for all who call this state home,” said the bill’s author, Assembly member Joaquin Arambula. “It’s an area our state has not leaned into enough, to provide coverage for those who are undocumented.”

Arambula’s bill would direct the state to ask the federal government to allow immigrants living in the state without authorization to get insurance through Covered California. Arambula sees the move as the critical first step to expand coverage. If approved, the Fresno lawmaker intends to push for state subsidies to help pay for insurance.

Both elements are essential for immigrants lacking legal status, said Jose Torres Casillas, a policy and legislative advocate with Health Access California, a consumer health group working with Arambula’s office on the measure.

“Access is one thing, but affordability is another,” Torres Casillas said.

Since taking office in 2019, Newsom has approved expanding Medi-Cal to regardless of immigration status. In doing so, the politician continuously rumored to be preparing for a presidential bid described the state as moving “one step closer” toward universal health care. But in January, Newsom announced a $22.5 billion state deficit and made no mention of new proposals for the state’s .

Newsom’s health secretary, Dr. Mark Ghaly, acknowledged the pressure to go further but he would not commit to a timeline.

“Up until now we’ve had so many other things to focus on,” Ghaly said. “This will become, frankly speaking, one of the most important next issues that we take on.”

California needs permission from the federal government to open Covered California to immigrants without legal residency because it is currently closed to them, and Arambula said he is in talks with Newsom administration officials about how to structure the bill.

Once the federal government opens Covered California up to all migrants, the state could set aside funding for subsidies. About 90% of enrollees in Covered California qualify for financial assistance, which is paid for with both state and federal funds. Since 2020, the state has spent $20 million a year on those subsidies, a fraction of the cost, because Congress has given states an infusion of money during the pandemic.

Previously, lawmakers had allocated roughly $300 million to lower insurance premiums for Covered California enrollees. Any financial assistance to people living in the state without authorization would likely have to come from state funds, and the costs could vary widely.

For instance, Colorado enrolled 10,000 such immigrants into a new insurance program designed solely for them at a cost of $57.8 million in state funds, said Adam Fox, deputy director of the Colorado Consumer Health Initiative. The program covered the full cost of insurance for enrollees.

In Washington state, immigrants who lack legal status can take advantage of a state fund next year to help all income-eligible state residents pay for insurance, said Michael Marchand, chief marketing officer for the Washington Health Benefit Exchange. State lawmakers have added $5 million to the fund for immigrants without legal authorization.

“It would serve as an incentive for additional undocumented immigration into our country,” said Sally Pipes, president and CEO of the Pacific Research Institute, a think tank that advocated against Medi-Cal expansion to immigrants without legal standing. “And put taxpayers on the hook for additional government health care costs and the inevitable higher tax bills to pay for them.”

California officials have previously considered allowing all immigrants to buy insurance from its state-run program before, submitting a request to the federal government in 2016. But the state rescinded its application after President Donald Trump took office, given his anti-immigration rhetoric and policies.

The Biden administration in December approved an exception to federal law for Washington state — a game changer in the eyes of immigration advocates, said Rachel Linn Gish, a spokesperson for Health Access.

“Seeing what other states have done and the waivers that are happening under Biden, it makes a huge difference in our approach,” she said.

But even if lawmakers pass a plan to open California’s insurance marketplace to all immigrants regardless of status, advocates said the state will have to wait until Jan. 1, 2024, to ask the federal government for permission, and it could take half a year or longer to get a response.

That means it could be years before Becerril can get coverage. Instead, she’s preparing for the worst.

“I’m paying for funeral coverage,” she said. “It’s more economical than paying the health coverage premium.”

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The federal government recently fixed a controversial Treasury Department rule tied to the Affordable Care Act that denied assistance to many families whose workplace coverage busted their budgets.

Because of the so-called family glitch, if a worker had access to employee-only coverage deemed affordable under federal guidelines, a spouse or dependents could not get help to buy a health plan through Covered California, the state’s ACA insurance marketplace, even if it was not affordable to put them on the employer plan.

This affected an estimated nationally, more than half of them children, since employers often contribute only to an employee’s premium, leaving workers to pay full fare for other family members.

Under a that took effect Dec. 12, if the cost of having you and your family on a workplace plan exceeds an affordability threshold — set at 9.12% of household income for 2023 — your spouse and dependents could qualify for financial aid to purchase insurance through Covered California. Affordability will be determined by how much you would have to pay to have them — and you — on your employer’s cheapest health plan.

ACA insurance subsidies come in the form of federal tax credits that can be taken upfront or settled with the IRS when you file your taxes the following year.

the UCLA Center for Health Policy Research and the UC Berkeley Labor Center show that 391,000 Californians previously excluded from subsidies in Covered California would be eligible for them under the new rule. Of those, an estimated 149,000 would likely enroll in a Covered California plan. Those switching from an employer-sponsored plan would save an average of $1,478 per person this year, according to the two centers.

“Fixing the family glitch is a critical step in really delivering on the promise of the ACA,” says Jessica Altman, executive director of Covered California. “If you don’t have affordable coverage from another source, the marketplace is where you should be able to come for affordable coverage.”

So, if you are paying too much to cover your family members on your employer’s health plan, it is definitely worth finding out whether you can get a tax credit to help pay their premiums on a Covered California plan. But finding the answer is complicated and will take considerable legwork.

If you have steady employment, last year’s income will probably be a good proxy for 2023, adding any pay raise you expect in the coming year. You’ll also need to calculate how much you would pay for your employer’s lowest-cost health plan — both for employee-only coverage and for family coverage. If the cost for you alone is under the 9.12% threshold, you will not qualify for a subsidized Covered California plan, even if your spouse and dependents do. That means a family could be split between two policies, with separate deductibles and different provider networks.

You also need to determine whether the lowest-cost plan offered by your employer meets the under the ACA. That means it must cover at least 60% of your total allowed medical expenses during the year and provide sufficient coverage for hospital and physician services. If it does not meet those requirements, you and your family might be able to get a subsidized plan through Covered California, depending on your income.

If two spouses have access to employer coverage, you’ll need to perform this exercise for both options.

Is your head spinning yet? You’re not alone.

“This stuff is just really complicated,” says Kevin Knauss, an insurance agent in Granite Bay. “And how can we possibly expect families that are doing all kinds of different things — kids, Christmas — to really focus on this stuff?”

But don’t ignore the new rule, because you could be leaving money on the table. Covered California has to help calculate your eligibility for subsidies. Your human resources department might be willing to help you fill it out. Or you could seek professional help, whether an insurance agent or other certified enroller. You wouldn’t need to pay a penny for either.

To find an insurance agent or certified enroller, log on to Covered California’s website () and click on the “Support” tab. Or call 800-300-1506. Covered California has a very useful FAQ all about the fix to the family glitch.

The enrollment period for 2023 coverage started on Nov. 1 and runs through Jan. 31. If you buy coverage this month, it will start on Feb. 1.

The family glitch fix isn’t the only new thing with Covered California. Starting this year, you can put a on your health plan, as long as they are not eligible for or enrolled in Medicare.

And, in case you missed it, Congress the supplemental tax credits that increase aid to people who were already getting some before and are available to many middle-class households that did not previously qualify for financial assistance.

The idea behind the expanded financial help is to limit the amount people spend on health care premiums to no more than 8.5% of household income, no matter how much money they make.

Knauss said he talked to a man in Marin County who was seeking a Covered California health plan for his family of four and qualified for a monthly subsidy of $1,400, even though he makes $200,000 a year. Being over 60 and living in Northern California, an expensive region, pushed his family’s premium to a level that opened the door for significant financial assistance, Knauss said.

If you are already enrolled in Covered California, don’t simply renew coverage for this year. Prices and provider networks can change from year to year, and there might be a new, cheaper option in your region. So shop around.

And whether you are new or returning to Covered California, know what your medical needs are likely to be. If you have a condition that requires intensive services, you might consider paying a higher premium in exchange for lower deductibles and coinsurance when you seek care.

Happy hunting.

Jessica Altman is the daughter of Drew Altman, who is president and CEO of KFF. KHN is an editorially independent program of KFF.

This story was produced by , which publishes , an editorially independent service of the .

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