BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1487 (Hernandez) - Medi-Cal eligibility: former foster
youths.
Amended: April 30, 2012 Policy Vote: Health 6-3
Urgency: No Mandate: Yes
Hearing Date: May 14, 2012 Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1487 would extend Medi-Cal eligibility to
former foster youth, until their 26th birthday (beginning in
2014). The bill also states legislative intent to enact in state
law any provisions of the federal Affordable Care Act that are
struck down by the Supreme Court.
Fiscal Impact:
Ongoing costs of $10 million to $15 million per year to
provide Medi-Cal services to former foster youth (50 percent
General Fund, 50 percent federal funds).
Potential ongoing costs around $10 billion per year
(General Fund) to recreate elements of the Affordable Care
Act in state law, depending on which sections, if any, are
overturned. For example:
o Enforcing an individual mandate requirement - The
Affordable Care Act mandates that individuals maintain
health care coverage, with enforcement based on tax
penalties. Based on the costs that the Internal Revenue
Service has identified to begin enforcement of the
individual mandate by the federal government, state costs
to enforce an individual mandate would likely be in the
tens of millions per year.
o Medicaid Expansion - under the Affordable Care Act,
up to 2 million California residents would be newly
eligible for Medi-Cal. Assuming that 75 percent of
eligible individuals enroll (and federal matching funds
are not available), total costs to the state could be up
to $8 billion per year.
SB 1487 (Hernandez)
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o Subsidizing coverage in the Exchange - under the
Affordable Care Act, the federal government will provide
premium credits to low-income individuals purchasing
coverage in the California Health Benefits Exchange. If
the state were to provide such premium credits, costs
could be in the low billions per year.
Unknown potential revenues - The Affordable Care Act
imposes a tax penalty on individuals that do not have health
coverage (with some exceptions). The Affordable Care Act
imposes a variety of taxes and fees, for example on
high-value health plans, pharmaceutical companies, health
plans, and the sale of medical devices. The Affordable Care
Act also makes several changes to the federal tax code to
raise revenues. To offset the cost of providing coverage in
California, the state could impose some combination of those
taxes or alternate taxes or fees.
Background: The federal Affordable Care Act makes many changes
to the nation's health care industry, with the general goal of
increasing health care coverage. Most of the provisions of the
Affordable Care Act go into effect in 2014.
The Affordable Care Act requires health plans and insurers to
allow dependents to remain on a parent or guardian's health plan
or insurance until age 26. Beginning in 2014, federal law also
requires the states to allow former foster youth who were
eligible for Medicaid upon their 18th birthday to remain
eligible until age 26. (Under current federal and state law,
former foster youth are eligible for Medi-Cal until age 21.)
There are two primary elements in the Affordable Care Act
designed to increase health care coverage: a mandate that all
individuals maintain coverage and an expansion of the Medicaid
program for low-income individuals.
The individual mandate requires that all individuals have health
care coverage (with certain exceptions). In order to assist
individuals that do not have employer-provided coverage and are
not eligible for public health care programs, the Affordable
Care Act authorizes premium credits for the purchase of coverage
by individuals within Health Benefit Exchanges. The subsidies
provided will generally be based on income level. (The
Affordable Care Act also provides tax credits to certain small
SB 1487 (Hernandez)
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businesses to encourage them to provide coverage to employees.)
The Medicaid expansion (Medi-Cal in California) will provide
coverage to all legal residents with incomes up to 138 percent
of the federal poverty level. For newly eligible Medi-Cal
enrollees, the federal government will provide 100 percent
federal financial participation at first, eventually dropping to
90 percent.
Proposed Law: SB 1487 would require the Department of Health
Care Services to extend eligibility for Medi-Cal to former
foster youth until their 26th birthday. This provision of the
bill would go into effect on January 1, 2014. The bill specifies
that it shall only be implemented to the extent that federal
financial participation is available and as required under
federal law.
The bill also states legislative intent to enact in state law
any provision of the Affordable Care Act that is struck down by
the Supreme Court.
Related Legislation:
SB 771 (Alquist) of 2010 included a similar expansion of
Medi-Cal eligibility to this bill. That bill was held on the
Assembly Appropriations Suspense File.
SB 114 (Liu) of 2009 would have required independent foster
care adolescents to be enrolled in Medi-Cal without
reapplication. That bill was held on this Committee's
Suspense File.
SB 951 (Hernandez) designates the Kaiser Small Group HMO as
the state's Essential Health Benefits benchmark plan. That
bill is in the Assembly.
SB 1453 (Monning) 2011 is identical to SB 951. That bill is
on the Assembly Floor.
SB 961 (Hernandez) makes a variety of changes to the
state's individual health plan market, pursuant to the
Affordable Care Act. That bill is on this Committee's
Suspense File.
AB 1461 (Monning) is identical to SB 961. That bill is on
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the Assembly Appropriations Committee's Suspense File.
Staff Comments: The cost estimates for the required expansion of
Medi-Cal eligibility to former foster youth include costs
incurred by local government who are responsible for determining
eligibility and enrolling Medi-Cal beneficiaries.
The estimates of potential state costs to replicate the
Affordable Care Act at the state level, while based on
reasonable assumptions, are very rough. They are intended only
to illustrate the magnitude of the costs that could occur if the
state decides to replicate portions of the Affordable Care Act
that are struck down by the Supreme Court.