Over the past decade, California policy changes have significantly increased the number of residents with access to comprehensive health insurance. It includes employer-sponsored health coverage, public health insurance (Medicare and Medi-Cal), and ACA premium subsidies. Unlike most other state budget items, average spending per enrollee for Medicaid has grown at low rates. It has helped reduce health-inclusive poverty.
How Does Health Insurance Affordability Affect Poverty?
The ACA and state policies have made it easier for millions of Californians to afford health insurance. The statewide poverty rate has fallen, but many people still live at or near the poverty line and need help keeping their coverage. These findings are based on data from the state’s Covered California insurance marketplace and a nationally representative survey of Californians. Using HIP, it is found that premium tax credits and the state’s Medi-Cal program have kept people in California below the poverty line in recent years. In 2021, the enhanced premium subsidies available through Covered California helped reduce poverty by 3.8 percentage points for those directly purchasing their insurance and 2.6 percentage points for those enrolled in the state’s Medi-Cal program.
Middle-income families need more help, as their net premium burdens are high as a share of income, and most do not qualify for premium tax credits. In addition, they risk losing their marketplace coverage if their employer drops its insurance or if their incomes rise to the point where their premiums exceed 9.86 percent of their income, the standard used to determine subsidy eligibility. Extending the availability of these subsidies to more consumers in this group could make coverage more affordable for them and further reduce their poverty rates.
What Are the Costs of Health Insurance in California?
Health insurance costs have increased much faster in California than wages and inflation. It has led to many people skipping or postponing health care because of cost concerns. Even those with health insurance often cannot afford medical bills and prescriptions. The state of California has taken steps to try and address rising healthcare costs. The approved state budget includes $30 million to create the Office of Health Care Affordability. It will be a new department intended to examine the healthcare industry. It is expected to help identify the primary sources of high prices among several departments and agencies. For those who cannot afford private health insurance, the state offers a public program called Medi-Cal, which provides low-cost health insurance to individuals with a limited income. Under the Affordable Care Act, most Californians can access Medi-Cal benefits if their household income is below 138% of the poverty level. The state also has a health insurance exchange known as Covered California. The deal allows individuals, families, and small businesses to shop for low-cost health plans online.
What Are the Impacts of Health Insurance on Poverty Rates in California?
California’s state-level safety net programs are a key part of the country’s effort to ensure all residents have access to health care. In addition to its public coverage through Medi-Cal, California offers subsidies to help low- and middle-income residents afford private insurance through the Covered California marketplace. The state has also been a leader in reducing poverty rates through housing and social services investments. These efforts, along with the expansion of Medi-Cal through the ACA and its predecessors, have substantially reduced California’s poverty rate over the past several decades. One issue that continues to limit the effectiveness of the state’s safety-net policies is limited access to care. Research and advocacy groups have long cited lower payment rates and provider reimbursements as the primary reason many healthcare providers refuse to accept Medi-Cal patients. The current subsidy structure insulates many low-income Californians from these cost differences, as nine out of ten Covered California enrollees rely on federal subsidies. But as state subsidies are likely to be withdrawn in 2021, it will become more important for policymakers to consider ways to address these disparities in the state’s private insurance market. As a start, monitoring the impact on poverty rates of the resumption of the Medi-Cal eligibility determination process should be a priority.
How Does Health Insurance Affordability Affect Poverty Rates in California?
Over the past decade, massive public investments in health coverage have helped millions of Californians stay healthy and economically stable. Healthcare costs are a major component of household budgets. When people are uninsured or have coverage that is too expensive to afford, they can face significant barriers when accessing care. Many low-income Californians rely on Medi-Cal, the state’s public health insurance program. As of fall 2021, about 13.5 million Californians had coverage through this program, free for residents meeting its requirements.
Other Californians purchase private coverage through the Covered California marketplace, where they may qualify for federal subsidies to help them afford plans. During the COVID-19 pandemic, temporary changes to these premium subsidies helped expand access to insurance for more Californians. Nevertheless, most Californians with incomes below the poverty line still have trouble affording health insurance. They often have to choose between paying for health insurance and other basic needs, like housing or food. Given that the cost of health insurance is continuing to climb more quickly than the average weekly earnings in California, this is especially true for those with lower incomes. For some, the gap is so large that they avoid getting needed care altogether.
