Is California breaking its promise to cut health care costs?

James Eaton

Brian Iv works in a factory in Orange County, earning around $26 per hour. He suffers chronic pain from a lifetime of manual labor jobs and previous workplace injuries, but often treats the pain with home remedies or traditional Cambodian practices. Going to the doctor is too expensive, he said.

Iv recently got a raise and was able to purchase health insurance through his company, but for a long time he had a Covered California Silver Plan, a mid-tier plan under the state’s version of the federal Affordable Care Act marketplace. A visit to a primary care doctor cost nearly $50, and every time Iv picked up a prescription it was an additional $10 to $15. It was a lot for someone living paycheck-to-paycheck with little wiggle room in the budget.

“Right now, after COVID-19, everything is expensive,” Iv said. “Sometimes when you get sick you avoid that (expense). You have to keep the money to pay the rent, pay the bills, pay the car.”

Mid-tier health coverage like Iv’s Silver Plan is widely considered the best value for people who have insurance through Covered California. But in the past nine years, deductibles for the Silver Plan have grown nearly 88{a5ceed037b574a4d8c6b44a0a7290437cee40655417128da3b56d864fe64414f} after adjusting for inflation, increasing out-of-pocket costs for enrollees. In raw numbers, last year deductibles grew from $3,700 for an individual and $7,400 for a family with a Silver Plan to $4,750 and $9,500, respectively.

That’s why health care advocates are miffed that Gov. Gavin Newsom’s  budget proposal would sweep away $333.4 million set aside a couple of years ago for the state to defray health care costs for middle-income residents, transferring the money to the general fund. The proposal to move money out of the Health Care Affordability Reserve Fund is temporary, with plans to restore it in 2025 when current federal subsidies expire. But advocates say inflationary pressures and rising health care costs are reasons to use that money right now to help Californians struggling to pay the bills.

“We recognize there’s not a lot of room for new spending in the current budget situation, but we don’t see this as new spending. We see this as the existing commitment,” said Diana Douglas, policy director for Health Access California, which sponsored legislation to create the reserve fund. 

The budget transfer idea is part of Newsom’s strategy to address a projected $22.5 billion deficit this year, a deficit that the nonpartisan Legislative Analyst’s Office predicts may be even worse come May when the budget will be revised based on actual state revenue. 

Newsom’s spokespeople ignored multiple requests for comment.

Given the inflationary pressure people like Iv face, the governor’s proposal to transfer the money into the general fund is “mystifying,” said Scott Graves, director of research at the California Budget and Policy Center, a nonprofit policy research group.

“Why is the governor borrowing from a special fund that was set up specifically to help make health coverage through Covered California more affordable, right?” Graves said. “This is money for which every penny in the account could right now be used to bring down the cost of health care for Californians, but instead the governor is choosing to sweep that money out of the account.” 

Stories like Iv’s are common, said Jaquelinne Molina, a caseworker at The Cambodian Family, a social services center where Iv receives case management for health care and financial aid issues. Most of the people she serves work in warehouses and factories for low pay and no benefits. 

“It’s three years after COVID, but people are still behind on their light bills, their water bills from 2020 because they weren’t able to work due to COVID,” Molina said. “Right now everything is tight and it gets harder and harder every year.”

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