BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 4 (Lara) - Health care coverage: immigration status
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|Version: April 28, 2015 |Policy Vote: HEALTH 7 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: May 4, 2015 |Consultant: Brendan McCarthy |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 4 would extend Medi-Cal eligibility to individuals
who would otherwise be eligible, except for their immigration
status. The bill would require the Health and Human Services
agency to apply for federal authorization to offer unsubsidized
health care coverage through the California Health Benefit
Exchange (Covered California) for individuals who are currently
prohibited from obtaining coverage due to their immigration
status. If federal authorization is not received, the bill would
create a parallel health exchange through which such individuals
could purchase unsubsidized coverage.
Fiscal
Impact: The fiscal estimates below are subject to a great deal of
uncertainty. The rates at which undocumented immigrants are
likely to apply for either Medi-Cal or unsubsidized coverage are
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unknown at this time and are likely to be heavily influenced by
concerns over coming to the attention of immigration authorities
and language barriers. In addition, the age and health status of
those who ultimately would enroll in Medi-Cal will have a
significant impact on the costs to provide coverage. At this
time, there is limited information available to accurately
project the cost to provide coverage to this population.
Finally, a pending executive action by the President Obama would
shield about half of California's undocumented immigrant
population from deportation. If that executive action stands,
those individuals would be eligible for full-scope Medi-Cal
coverage under current law.
The costs for the Medi-Cal expansion below reflect two
scenarios. The first scenario does not assume that the courts
uphold the President's Executive Action and therefore the
state's current undocumented population remains the same. The
second scenario assumes that the courts uphold the President's
Executive Action, which would make a significant number of
undocumented immigrants eligible for full scope Medi-Cal under
current law. This would significantly reduce the undocumented
population who would be made eligible for full scope Medi-Cal
under this bill.
Increased Medi-Cal costs without the President's Executive
Action. Likely annual increase in Medi-Cal spending between
$280 million and $740 million per year (General Fund).
Under current law, undocumented immigrants are eligible for
limited scope Medi-Cal benefits such as Emergency Medi-Cal and
Pregnancy-Only Medi-Cal. Under current practice, the federal
government provides funding for those services both in the
fee-for-service system and for undocumented immigrants who are
enrolled in managed care. Based on current practice, about 60
percent of Medi-Cal managed care costs for individuals covered
by this bill would be eligible for federal matching funds
(i.e. about 60 percent of Medi-Cal managed care costs for
immigrants are for services such as emergency services and
pregnancy-related services). This analysis assumes that on the
low end about 50 percent of eligible undocumented immigrants
would enroll in Medi-Cal under the bill - which is roughly the
number of undocumented immigrants, on average, who access
emergency- or pregnancy-related Medi-Cal services each year.
On the high end, this analysis assumes that about 60 percent
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of eligible individuals enroll in Medi-Cal - which is equal to
the pre-Affordable Care Act enrollment rate for Medi-Cal
eligible individuals in the state.
The costs above reflect the annual cost to provide full-scope
Medi-Cal coverage to the enrolling individuals, accounting for
available federal matching funds, less the current state
spending to provide limited scope Medi-Cal services, as the
state is already incurring those costs. The analysis assumes
that the per member per month cost to provide coverage to
parents and children will be similar to such costs for the
existing Medi-Cal population. The analysis assumes that the
per member per month cost to provide coverage to childless
adults will range from 100 percent to 200 percent of the
current cost to provide coverage for parents in the existing
Medi-Cal population. (The administration indicates that the
current costs to provide coverage for childless adults under
the Medi-Cal expansion are significantly higher than has been
the case for previously eligible adults. Given the limited
experience of providing coverage for that population and the
fact that immigrants are generally younger and healthier than
the native born population, this analysis assumes costs to
cover this population will be lower.)
The analysis also assumes that there will be reductions in
state spending on certain state-only health care programs
(such as FamilyPACT and the Every Woman Counts programs) due
to undocumented immigrants currently receiving services from
those programs shifting to full-scope Medi-Cal coverage.
Finally, by shifting individuals from fee-for-service Medi-Cal
into Medi-Cal managed care and enrolling additional
individuals in managed care, the state will receive additional
tax revenue under the Managed Care Organization Tax.
Increased Medi-Cal costs under the President's Executive
Action. Likely increase in Medi-Cal spending between $175
million and $455 million per year (General Fund). Based on
estimates by the Pew Research Center, the pending Executive
Action would protect about 900,000 of the state's 2.5 million
undocumented immigrants from deportation. Under current law,
those individuals would be eligible for full-scope Medi-Cal.
Thus, the cost to provide coverage to those individuals would
not be attributable to this bill. The costs above reflect the
projected cost to provide full-scope Medi-Cal to the remaining
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income-eligible undocumented population who would not be
protected from deportation (assuming similar enrollment rates
as discussed above).
Unknown, but potentially significant savings to the state
under realignment (General Fund). Under current law, the state
has set up a system to direct funds from the counties to the
state, under the premise that expansion of Medi-Cal will
reduce county expenditures for health care services to the
uninsured. This process is generally governed by formulas that
take into account historic and actual expenses by the
counties. Under the system, there is a maximum amount of
funding that can be redirected to the state. By expanding
Medi-Cal coverage, this bill will further reduce county health
care expenditures (in counties that are currently providing
health care services to the undocumented) and should increase
redirected funding to the state. The size of this impact is
unknown and would depend on enrollment in Medi-Cal, actual
reductions in county spending, and the amount of additional
redirections that would be allowed under the current system.
Annual, fee-supported costs in the tens of millions per year
to provide coverage through Covered California (special fund).
The bill authorizes undocumented immigrants to purchase health
care coverage, without subsidy, through Covered California or
a parallel exchange. Individuals who purchase such coverage
would pay for the administrative costs of the Exchange, via a
participation fee that Covered California assesses on
qualified health plans. Because coverage through Covered
California would be unsubsidized and because undocumented
immigrants tend to be low-income, enrollment rates through
Covered California are not likely to be high. If 20% of
undocumented immigrants who are not income eligible for
Medi-Cal enroll through Covered California, the administrative
costs and the fees collected to pay those costs would be about
$25 million per year.
Background: Under state and federal law, the Department of Health Care
Services operates the Medi-Cal program, which provides health
care coverage to pregnant women, children and their parents with
low incomes, as well as blind, disabled, and certain other
populations. Generally, the federal government provides a 50
percent federal match for state expenditures.
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Pursuant to the federal Affordable Care Act, California has
opted to expand eligibility for Medi-Cal up to 138 percent of
the federal poverty level and to include childless adults. The
Affordable Care Act provides a significantly enhanced federal
match for the Medi-Cal expansion. Under the law, the federal
government will pay for 100 percent of the cost of the Medi-Cal
expansion in 2013-14, declining to a 90 percent federal match in
the 2020 federal fiscal year and thereafter.
With the exception of certain populations (for example,
individuals eligible for limited scope Medi-Cal benefits or
individuals dually eligible for Medi-Cal and Medicare in most
counties), managed care is the primary system for providing
Medi-Cal benefits. Currently, there are about 12.2 million
Medi-Cal beneficiaries, more that 80 percent of whom are
enrolled in Medi-Cal managed care.
Federal law generally prohibits the use of federal matching
funds for services provided to undocumented immigrants (with
certain exceptions such as emergency coverage or pregnancy-only
coverage).
Under the federal Affordable Care Act states are required to
establish American Health Benefit Exchanges. If a state does not
create an Exchange, the federal government will do so. Within
the Exchanges, individuals will be able to purchase health care
coverage with standardized benefit packages and actuarial
values. In addition, individuals with incomes between 100
percent and 400 percent of the federal poverty level will be
eligible for subsidies for coverage purchased in the Exchanges.
California has established its own California Health Benefit
Exchange (referred to as "Covered California"). In order to
establish eligibility for subsidies, Covered California operates
call centers, contracts with counties, and works with other
groups to help consumers navigate the eligibility and enrollment
process.
The Affordable care act prohibits undocumented immigrants from
purchasing coverage through health benefit exchanges set up with
federal grant funds or from receiving federal tax subsidies
through the exchanges.
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Proposed Law:
SB 4 would extend Medi-Cal eligibility to individuals who
would otherwise be eligible, except for their immigration
status. The bill would require the Health and Human Services
agency to apply for federal authorization to offer unsubsidized
health care coverage through the California Health Benefit
Exchange (Covered California) for individuals who are currently
prohibited from obtaining coverage due to their immigration
status. If federal authorization is not received, the bill would
create a parallel health exchange through which such individuals
could purchase unsubsidized coverage.
Specific provisions of the bill would:
Require the Secretary of the Health and Human Services
agency to apply to the federal government for a waiver of
federal law to allow the state to offer health care coverage
through Covered California, without any premium subsidies or
cost sharing reductions;
If federal approval is not received, the bill would
authorize in statute the creation of the California Health
Exchange Program for All Californians, governed by the
Covered California board and subject to most of the
requirements governing the operation of Covered California;
Authorize the California Health Exchange Program for All
Californians to provide health care coverage to individuals
who would otherwise be eligible to purchase coverage through
Covered California, but for their immigration status;
The bill does not authorize premium subsidies or reduced
cost sharing for coverage through the California Health
Exchange Program for All Californians;
Create a new, continuously appropriated special fund to pay
for the operations of the California Health Exchange Program
for All Californians, to be supported by fees assessed on
coverage provided through the new exchange;
Make individuals who would be eligible for full-scope
Medi-Cal benefits, but for their immigration status,
eligible for those services;
Require the Department of Health Care Services to adopt
regulations to implement the necessary changes to Medi-Cal
by July 1, 2018, but also allow the Department to implement
the bill through other means until regulations are adopted;
Require the Department of Health Care Services to
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transition individuals receiving limited scope Medi-Cal
benefits to full-scope coverage.
Related
Legislation: SB 1005 (Lara, 2014) was substantially similar to
this bill, except that bill required coverage provided through
Covered California or a parallel exchange to include premium
subsidies, to be paid with state funds. That bill was held on
this committee's Suspense File.
Staff
Comments: Under current practice, counties perform a
significant amount of the enrollment and caseload management for
the Medi-Cal program. By expanding Medi-Cal eligibility, this
bill will significantly increase county enrollment costs. Those
costs are paid through the Medi-Cal budget process.
Under current law, the state imposes a 3.9% tax on Medi-Cal
managed care plans, which is used to draw down federal funding
and support the Medi-Cal program. Recent federal guidance
indicates that the state's existing tax on Medi-Cal managed care
plans is not allowed under federal rules, because it does not
apply to managed care plans in general. The Governor has
proposed to replace the existing tax with a tax on all managed
care plans. This analysis assumes that managed care tax
revenues would be about 1 percent of premiums.
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