New state legislation introduced this week would fill key affordability gaps in Covered California, potentially lowering cost-sharing and eliminating deductibles for over a million Californians getting coverage through the state marketplace.
AB 1878 by Assemblymember Dr. Jim Wood, and SB 944 by Senator Dr. Richard Pan, both sponsored by Health Access California would remove financial barriers to care for hundreds of thousands of patients, and encourage even more Californians to sign up for coverage.
Without such help, low- and middle-income Californians face counterproductive out-of-pocket costs that are financially unfeasible. High cost-sharing, especially deductibles, lead people who have coverage to avoid needed care, or face debt for seeking care, and keeps some people from purchasing care at all. Those who earn just over $2,000 per month have hospital deductibles approaching $4,000 per year, and pay over $30 for a single primary care visit for a Silver-level plan. In a Bronze plan, deductibles are over $6,000 per year, which is how much a consumer must pay out-of-pocket before getting any coverage, with the exception of preventive care and three doctor visits.
“I am proud of the investments my colleagues and I have led in California to expand health care coverage since the initial passage of the Affordable Care Act. Health insurance is only beneficial if people are able to use it to access primary, preventive, specialty, and acute care, when needed. That is why I am introducing this critical legislation, which will create state subsidies to offset copayments and eliminate deductibles so that Californians can get the care that they need without the worry of prohibitive cost sharing that creates barriers and delays to accessing quality health care.” – Senator Richard Pan (D-Sacramento), chair of the Senate Health Committee.
“Covered California has helped to provide health care coverage for 1.8 million Californians, and any opportunity to improve affordability and lower out-of-pocket costs by eliminating co-pays and deductibles will remove one more barrier for people who need coverage. Co-pays and deductibles can often prevent people from affording coverage and if we can help them, we will.” – Assemblymember Jim Wood (D-Santa Rosa), chair of the Assembly Health Committee.
In the last few weeks, Covered California released a report “Bringing Health Care Coverage Within Reach” which modeled the potential reductions in cost-sharing, depending on the state and federal resources available. The two bills would invest in zeroing out deductibles and reducing co-pays.
This proposal builds on the Biden-Harris American Rescue Plan, passed early in 2021, which included historic affordability help to almost all Covered California enrollees ensuring that nobody had to spend more than 8.5% of their income for coverage, effectively eliminating all “affordability cliffs” in the ACA marketplaces. This federal package cut premiums on average of $1000/year for Covered California enrollees. This has led to record enrollment – more than 1.8 million Californians now receive coverage through Covered California. Congress is actively considering whether to extend this additional affordability assistance into future years.
AB 1848 (Wood) and SB 944 (Pan) would add to this federal help, by using state subsidies to help Californians cope with cost-sharing—much like California piloted premium assistance a few years ago. However, supporters acknowledge this but may not be possible if the federal financial assistance is not extended, since such state dollars would need to attempt to partially backfill the lost federal funds.
Record enrollment in Covered California shows how Californians are directly benefiting from the premium affordability assistance from the American Rescue Plan. Now California can take the next step to improve affordability for not just coverage, but for cost-sharing to get care. If Congress doesn’t take action to extend premium assistance, premiums will raise by an average of $1,000 per person. If California legislators don’t act, we could see deductibles for Silver plans rise to $5,000. We need our policymakers at the state and federal level to protect patients from these rising health costs.