Senate Bill 4 — Health Care for All — Set for First Hearing

A bill that would expand health care coverage to undocumented Californians gets its first hearing in the state Legislature this week. The Senate Health Committee will take up Senate Bill 4 (Lara) on Wednesday during a 1:30 p.m. hearing in the state Capitol.

SB 4 aims to address a significant shortcoming of the federal Affordable Care Act (ACA), also known as health care reform. While the ACA has done a world of good for Californians who previously lacked access to affordable coverage, it intentionally left one group out in the cold: undocumented immigrants. Federal dollars can’t be used to support health care coverage for undocumented immigrants through Medicaid (Medi-Cal in California). Moreover, undocumented residents can’t purchase coverage through the health insurance marketplace — or “exchange” — that the state set up under the ACA (Covered California).

SB 4 would extend coverage to undocumented immigrants through two distinct sets of policy changes. First, the bill would allow those with the lowest incomes to receive health care coverage through Medi-Cal, so long as they meet all other eligibility requirements. (Medi-Cal’s income limit for most adults is 138 percent of the federal poverty line, or roughly $16,200 for an individual in 2015.) Under SB 4, Medi-Cal coverage for undocumented immigrants would be paid for “with state-only funds” if the federal government declines to share in the cost.

Second, SB 4 would create a new coverage pathway for undocumented immigrants whose incomes exceed the Medi-Cal limit. These residents would be allowed to purchase coverage through a state-run health insurance marketplace. Creating this new coverage pathway would involve either a one- or a two-step process, depending on how the federal government responds to the plan laid out in SB 4.

Initially, the state would ask the feds to waive the current restrictions and let undocumented residents buy coverage through California’s health insurance exchange. (The state would pursue this request under a waiver provision — Section 1332 — included in the ACA.) If the feds say “yes,” undocumented residents could purchase health care coverage offered through Covered California, but would not have access to the federal financial assistance that other Californians receive in order to reduce the cost of their coverage.

If the feds don’t agree to let undocumented residents buy coverage through Covered California, SB 4 would set in motion a different solution, beginning in 2017: the creation of a parallel state-run health insurance marketplace for undocumented residents. This new marketplace would be called the “California Health Exchange Program for All Californians” and would be governed by the same five-member board that oversees Covered California. The board would be required to “assess a charge” on health plans to support the operations of the new exchange and could accept additional funding from private or public sources, although SB 4 presumes that the parallel marketplace would operate without state General Fund support. The board would be allowed to offer “premium subsidies and cost sharing reductions” to lower the cost of coverage for undocumented residents who choose to buy insurance, but only “to the extent funding is available.”

SB 4 seems destined to win approval in the Senate Health Committee. Three of the bill’s co-authors sit on the committee, and SB 4 is part of a 10-bill package focused on undocumented immigrants that was recently unveiled by Democratic leaders in the Legislature. If SB 4 does get the go-ahead this week, the next stop on its legislative journey will be the Senate Appropriations Committee, where the bill’s costs will be analyzed. Senator Ricardo Lara — the bill’s primary author — has been working to identify revenues that could offset some or all of any state costs associated with SB 4, thereby minimizing the potential impact on the state budget.

There is one development that could help to reduce the cost of SB 4: President Obama’s recent executive actions on immigration, which are intended to allow certain undocumented immigrants to remain in the US — and work legally — without fear of deportation (this is known as “deferred action”). The President’s new policies, which are on hold due to a federal court order, would benefit more than 1 million undocumented immigrants in California. Due to a longstanding state policy, a large share of these undocumented Californians — potentially hundreds of thousands — could become eligible for Medi-Cal, as we explained earlier this year. If this were to happen, then the costs associated with SB 4 would drop. Why? Because many undocumented immigrants who might otherwise enroll in Medi-Cal as a result of SB 4 would instead enroll based on California’s current policy toward undocumented residents who qualify for deferred action. Any additional costs associated with these new Medi-Cal enrollees would not be attributable to SB 4, and so the overall cost of the bill would be reduced.

California has done much in recent years to expand access to affordable health care coverage under the umbrella of the ACA. Unfortunately, the ACA falls short when it comes to coverage for undocumented immigrants, despite their significant contributions to the nation as well as to our state. By advancing health care for all, SB 4 would make significant strides in addressing this major shortcoming of federal health care reform.

— Scott Graves