Skip to content

Health care should be accessible and affordable to all Californians. No one should ever have to skip or delay health care due to the cost. Forgoing preventive care or treatment for health conditions is harmful to health and well-being.

Unfortunately, many Californians lack access to affordable health care. For some, monthly health insurance premiums are too high, and so they go without coverage. But even when people have health insurance, steep out-of-pocket costs — such as copays and deductibles — often deter individuals from obtaining the care they need. The impact of unaffordable care falls disproportionately on Californians of color due to a legacy of racist policies and practices:

  • Latinx Californians are most likely to experience problems paying medical bills, followed by Black, white, and Asian Californians.
  • Latinx and Black Californians are more likely to report having medical debt.
  • Black and Latinx Californians are most likely to skip health care services due to the cost.

Ensuring that all Californians have access to affordable health coverage and that they can access care when they need it will require additional state investments. In fact, funds are already available to make coverage more affordable for hundreds of thousands of Californians. Yet, Governor Newsom has blocked efforts to use these funds to boost affordability assistance.

California’s Individual Mandate Penalty: A Funding Source to Help Make Health Coverage More Affordable

In 2019, state policymakers created a penalty that applies, with certain exceptions, to people who lack minimum essential health coverage. This penalty is formally called the “Individual Shared Responsibility Penalty,” but is more commonly known as the “individual mandate penalty.”

The individual mandate penalty has two primary purposes:

  • Encourage young and healthy people — who might be inclined to go without health insurance — to enroll in coverage in order to ensure a more balanced “risk pool” and prevent premiums from spiraling upward.
  • Provide a funding source to reduce the cost of health insurance for people who buy coverage through Covered California, our state’s health insurance marketplace.

The individual mandate penalty can be costly. An adult who lacks coverage for an entire year and doesn’t qualify for an exemption must pay at least $850 plus $425 per dependent child under 18 in the household. This means that a family with two adults and two children could face a penalty of at least $2,550.

Many Californians with low-to-moderate incomes are penalized for lacking health coverage. Specifically, nearly 2 in 5 households who reported that they owed the penalty for tax year 2020 had incomes at or below 266% of the federal poverty level (FPL). In 2020, 266% FPL reflected an annual income of around $34,000; for a family of four, it was about $69,700.

A bar chart showing the individual shared responsibility penalty by federal poverty level during the tax year 2020, where about 2 in 5 households penalized for not having minimum essential health care coverage had low-to-moderate incomes.

Individual Mandate Penalty Revenue Has Not Been Used for Its Intended Purpose

California is expected to raise a total of $1.4 billion in individual mandate penalty revenue across four state fiscal years: 2020-21 through 2023-24, which begins on July 1, 2023. (The penalty revenue is deposited into the state’s General Fund.) However, none of these dollars have been specifically budgeted to reduce the cost of insurance purchased through Covered California. Instead, some penalty revenue appears to have been absorbed by the state’s General Fund and used to support other public systems and services.

Notably, state leaders did agree in 2021 to deposit $334 million in penalty revenue into a new Health Care Affordability Reserve Fund. These dollars were explicitly set aside to fund affordability assistance for Covered California enrollees.

However, last year the governor halted implementation of an affordability assistance program that would have been supported with the penalty reserve funds. This program would have eliminated deductibles and reduced copays for hundreds of thousands of Californians who purchase health insurance through Covered California — including people with low-to-moderate incomes.

Moreover, the governor now proposes to transfer all $334 million in penalty revenue from the Health Care Affordability Reserve Fund to the state’s General Fund in order to help address the projected budget shortfall. With this proposal, the governor makes clear that he does not prioritize using the penalty revenue for its intended purpose: further reducing the cost of health coverage for Californians who are struggling to afford the cost of care.

The governor also has failed to outline a plan for how to use the hundreds of millions of dollars in penalty revenue that the state will continue to receive each year from Californians who lack minimum essential health coverage. Without a plan, penalty dollars will end up supporting general state budget costs rather than being targeted to assist Californians struggling with the high cost of health care.

Penalizing Californians with Low-to-Moderate Incomes Without Addressing Health Care Affordability Is an Injustice

Penalizing Californians with low-to-moderate incomes for not obtaining health coverage and then failing to use the penalty revenue to address the high cost of coverage and care is an injustice. Additional financial assistance is critical for Californians who are uninsured and struggling to purchase coverage as well as for those who are insured but can’t afford to access the care they need. Governor Newsom should ensure that dollars raised from the state’s individual mandate penalty help people afford health insurance through Covered California, as was intended when the penalty was established.

Don't miss an update.

Join our email list!

The Supplemental Nutrition Assistance Program (SNAP) — known as CalFresh in California — is the largest federal food assistance program for families with low incomes. On average, nearly 5 million Californians received CalFresh benefits each month in 2022. While CalFresh participation varied across the state, around one-quarter of the population in three congressional districts depended on this program to put food on their tables.

CalFresh has been instrumental in recent years in combating poverty and feeding families as the effects of the COVID-19 pandemic continue to be felt throughout the state. This year, the program is due for reauthorization at the federal level, with the Farm Bill set to expire in September. With much of the COVID-19 pandemic relief ending or being rolled back, including SNAP emergency allotments and Pandemic EBT, many CalFresh recipients will see their benefits decrease.1See report by the Center on Budget and Policy Priorities for additional information on temporary pandemic-related SNAP benefits. Food insecurity across California may be exacerbated without this additional support that many families have come to rely on. Federal and state leaders should protect and strengthen CalFresh.

Almost 5 Million Californians Benefited from CalFresh Every Month in 2022

Congressional DistrictRepresentativePartyEstimated Average Number of Participants, 2022*CalFresh Participants as a Share of the District  PopulationRank (Highest to Lowest Percentage)Estimated Annual CalFresh Benefits**
1Doug LaMalfaRepublican119,00015.5%14$343,478,000
2Jared HuffmanDemocratic76,0009.9%33$219,919,000
3Kevin KileyRepublican49,0006.3%44$140,823,000
4Mike ThompsonDemocratic66,0008.7%39$190,732,000
5Tom McClintockRepublican82,00010.6%32$236,896,000
6Ami BeraDemocratic116,00015.4%17$336,949,000
7Doris MatsuiDemocratic117,00015.4%16$338,716,000
8John GaramendiDemocratic89,00011.9%27$257,694,000
9Josh HarderDemocratic107,00013.9%19$310,064,000
10Mark DeSaulnierDemocratic37,0004.9%50$107,334,000
11Nancy PelosiDemocratic80,00011.3%29$230,125,000
12Barbara LeeDemocratic92,00012.5%24$266,687,000
13John DuarteRepublican146,00018.7%7$423,842,000
14Eric SwalwellDemocratic50,0006.7%42$145,099,000
15Kevin MullinDemocratic42,0005.7%46$122,618,000
16Anna EshooDemocratic33,0004.5%52$96,740,000
17Ro KhannaDemocratic35,0004.7%51$100,676,000
18Zoe LofgrenDemocratic89,00012.2%26$258,159,000
19Jimmy PanettaDemocratic50,0006.5%43$144,907,000
20Kevin McCarthyRepublican116,00015.1%18$334,899,000
21Jim CostaDemocratic199,00026.3%1$575,427,000
22David G. ValadaoRepublican188,00023.6%2$543,496,000
23Jay ObernolteRepublican150,00019.7%5$434,598,000
24Salud CarbajalDemocratic69,0009.1%34$201,017,000
25Raul RuizDemocratic149,00019.4%6$430,416,000
26Julia BrownleyDemocratic61,0008.1%40$176,388,000
27Mike GarciaRepublican117,00015.6%13$338,138,000
28Judy ChuDemocratic66,0008.9%38$190,214,000
29Tony CárdenasDemocratic121,00016.4%11$351,133,000
30Adam SchiffDemocratic101,00013.9%20$293,270,000
31Grace NapolitanoDemocratic100,00013.6%22$290,362,000
32Brad ShermanDemocratic69,0009.1%36$200,042,000
33Pete AguilarDemocratic126,00016.5%9$363,765,000
34Jimmy GomezDemocratic137,00018.2%8$395,248,000
35Norma TorresDemocratic95,00012.3%25$276,276,000
36Ted LieuDemocratic44,0006.0%45$126,011,000
37Sydney KamlagerDemocratic165,00021.9%4$476,158,000
38Linda SánchezDemocratic81,00010.9%31$234,789,000
39Mark TakanoDemocratic99,00013.0%23$287,857,000
40Young KimRepublican37,0004.9%49$106,302,000
41Ken CalvertRepublican71,0009.0%37$204,736,000
42Robert GarciaDemocratic121,00016.3%12$349,609,000
43Maxine WatersDemocratic166,00022.5%3$479,267,000
44Nanette BarragánDemocratic116,00015.4%15$336,596,000
45Michelle SteelRepublican84,00011.2%30$242,049,000
46Lou CorreaDemocratic103,00013.6%21$299,049,000
47Katie PorterDemocratic40,0005.3%48$115,231,000
48Darrell IssaRepublican68,0009.1%35$197,230,000
49Mike LevinDemocratic40,0005.3%47$116,891,000
50Scott PetersDemocratic51,0006.8%41$147,559,000
51Sara JacobsDemocratic87,00011.4%28$252,617,000
52Juan VargasDemocratic125,00016.5%10$361,732,000

* Figures are rounded to the nearest 100. Estimates do not sum to total due to rounding and excluded zip code data.
** Figures are rounded to the nearest 1,000. Estimates do not sum to total due to rounding and excluded zip code data.

Note: Values for California reflect the actual number of CalFresh participants and the total value of CalFresh benefits for January through December. District-level estimates are based on zip code-level data for CalFresh recipients in December 2022. About 1% of zip code-level data are excluded due to hidden totals for de-identification purposes and special classifications of zip codes. Therefore, participation for some congressional districts may be underestimated. Data are for individuals receiving federal SNAP benefits and do not reflect individuals receiving state-funded assistance through the California Food Assistance Program.

Source: California Budget & Policy Center analysis of data from the Department of Social Services and US Census Bureau, American Community Survey

A map showing the estimated CalFresh participation in California in 2022 where the CalFresh program helps feed families in every congressional district.
A map showing the estimated CalFresh participation in the Los Angeles region in 2022 where the CalFresh program helps feed families in every congressional district.

Don't miss an update.

Join our email list!

All California children deserve to grow up in a state where their basic needs are met. CalWORKs is a key part of the California safety net designed to provide families with low incomes financial support to meet their basic needs. However, state policies that reinforce counterproductive federal work requirements limit families’ access to this program. These policies include penalizing CalWORKs parents who are not meeting program requirements by imposing unnecessarily harsh sanctions that reduce their monthly grants.

A bar chart showing the monthly CalWORKs grant for a single-parent family with two children in 2023 where CalWORKs sanctions push about 60,000 children per month deeper into poverty.

On average, the families of 60,000 children are affected by sanctions each month.1Based on Budget Center analysis of Department of Social Services data for August 2022, the most recent month with available statewide data. For typical CalWORKs single-parent families, sanctions can cut monthly grants by about $120, and a single-parent family with two children can lose up to a maximum of $235 each month. If the family’s grant is reduced by sanctions for an entire year, they can lose up to $2,820 annually — or about one-fifth of the total income they would otherwise receive from CalWORKs to pay for their basic needs.

Research shows that sanctioned recipients are often those who face the most barriers to employment and do not fully understand the sanctions process due to limited education, learning disabilities, or mental health problems.2Rachel Kirzner, TANF Sanctions: Their Impact on Earnings, Employment, and Health (Center for Hunger-Free Communities, Drexel University, March 23, 2015). As California moves to reimagine the CalWORKs program to better support participants, building on recent state reforms including CalWORKs 2.0 and Cal-OAR, and reconsidering the penalty pass-on structure related to the Work Participation Rate (WPR), it must also consider the negative impact of sanctions on families. California should strive to lift families up through its safety net programs by offering support and can take steps to minimize the amount or length of sanctions to reduce harm to families.

Don't miss an update.

Join our email list!

All parents should have the support they need to ensure economic security for their children and themselves. CalWORKs is California’s primary program to help families with children that are struggling to secure a basic income to meet their needs. Recent state reforms to CalWORKs are designed to improve the program’s capacity to effectively focus on supporting parents to identify goals, address barriers, and secure durable improvements in economic stability and family well-being.

However, state CalWORKs policy continues to threaten counties with financial penalties tied to the federally-defined Work Participation Rate (WPR), incentivizing counties and caseworkers to direct CalWORKs participants away from supportive activities to address barriers that do not fully count toward meeting the federal WPR.

Removing this threat of financial penalty could better align state policy with the CalWORKs program’s current focus, facilitating full implementation of strategies designed to effectively support parents and families in securing long-term stability and well-being. Policymakers also have options to build on these reforms to further support families participating in CalWORKs.

CalWORKs Participants Face Multiple Challenges to Securing Economic Security

CalWORKs is California’s version of the federal Temporary Assistance for Needy Families (TANF) program and supports more than 300,000 families throughout the state, providing modest monthly cash grants while helping stabilize families and supporting parents in addressing barriers to employment and finding jobs.1For additional discussion of the CalWORKs program, recent reforms, work requirements, and the federal WPR, see also Esi Hutchful, Undercutting the Needs of California Families: The Harm of Racist, Sexist Work Requirements & Penalties in CalWORKs (California Budget & Policy Center, 2022). CalWORKs parents face a labor market in which gender- and race-based discrimination are ongoing, as well as workplace expectations and practices that make it difficult for parents to balance work with caregiving responsibilities. These dynamics significantly affect CalWORKs parents, who are predominantly women, people of color, and parents of young children.

A column chart showing the percentage of CalWORKS clients with welfare-to-work participation requirements in 2020 where CalWORKs clients are particularly exposed to an economy that discriminates against women, people of color and parents.

CalWORKs parents also face an economy where a postsecondary credential is increasingly required to access all but the lowest-paying jobs. Yet nearly half of CalWORKs household heads do not have a high school degree or equivalent, reflecting structural barriers to education that many have encountered, again pointing to the effects of racism and sexism embodied by past and ongoing policies and practices across a variety of domains.2Adriana Ramos-Yamamoto and Monica Davalos, Confronting Racism, Overcoming COVID-19, & Advancing Health Equity (California Budget & Policy Center, 2021).

A donut chart showing that nearly half of CalWORKs household heads have not completed high school.

In addition, many CalWORKs parents also experience significant health challenges. Among parents completing appraisals of strengths and barriers at program entry, 28% faced mental health challenges, 5% struggled with substance abuse, and 18% had faced domestic abuse.3Data reflect the share of CalWORKs participants recommended for services to address mental health, substance abuse, or domestic abuse among those completing Online CalWORKs Appraisal Tool (OCAT) assessments during fiscal year 2019-20. Source: Budget Center analysis of Department of Social Services data from Department of Social Services, CalWORKs Annual Summary (November 2022). These additional barriers can negatively affect both parents’ employment prospects and their families’ broader well-being.

Supporting Parents to Address Barriers Can Improve Long-Term Employment and Child and Family Well-Being

There are multiple reasons for the CalWORKs program to prioritize supporting parents in addressing the barriers they face:

  • Challenges related to limited education and mental health, substance use, and domestic abuse barriers limit parents’ capacity to work at all and limit the quality of jobs parents can secure. Addressing these barriers improves parents’ likelihood of success in securing and retaining jobs and improves parents’ access to jobs with higher pay and more job security over the short-term and the long-term.
  • Addressing these challenges also promotes child well-being and family stability. Parental struggles with mental health, substance use, and domestic abuse are risk factors linked to child neglect leading to child welfare involvement.4Lindsey Palmer, et al. “What Does Child Protective Services Investigate as Neglect? A Population-Based Study.” Child Maltreatment (July 13, 2022), doi: 10.1177/10775595221114144. Supporting parents to address these challenges can help families stabilize and safely remain intact, facilitating prevention of child maltreatment and the need for child removal and foster care placement.

Recent State Reforms to CalWORKs Recognize that Effective and Respectful Services Should Focus on Supporting Families…

Recognizing the significant challenges facing CalWORKs families – and the importance of respectfully addressing these challenges to enable families to secure long-term stability – in recent years state policymakers have made several changes to CalWORKs policy intended to improve support for participants.

Through Senate Bill 1041 of 2012, California established its own CalWORKs participation standards that are distinct from federal standards.5Senate Bill 1041 (Committee on Budget and Fiscal Review, Chapter 47, Statutes of 2012). These state standards include no rigid time limits on activities to address barriers or advance education, treating these activities as equal to employment activities for demonstrating engaged program participation.

The state has also adopted an evidence-based behavioral approach to guide families in setting goals (CalWORKs 2.0) and created more holistic outcome measures to evaluate the program (the California CalWORKs Outcome and Accountability Review or Cal-OAR). California also implemented a voluntary home visiting program to support family health and engaged parenting.

… But Continued Threat of County Penalties Linked to the Federal Work Participation Rate Hinders Full Implementation of Reforms

These recent constructive CalWORKs reforms are hindered from full implementation, however, because state policy continues to threaten counties with potential financial penalties linked to the Workforce Participation Rate as defined by federal TANF rules.

The federal government defines success for state TANF programs not based on how well the programs meet families’ needs, but only based on whether programs meet specific WPR targets, determined by the percentage of parents receiving assistance that are engaged in a narrowly-defined set of welfare-to-work activities. These federal activities focus on getting parents into paid employment as quickly as possible, despite the fact that such work requirements have racist and sexist roots and research suggests they do not lead to meaningful long-term improvements in employment and are linked to increases in deep poverty.6Elisa Minoff, The Racist Roots of Work Requirements (Center for the Study of Social Policy, February 2020); LaDonna Pavetti, TANF Studies Show Work Requirement Proposals for Other Programs Would Harm Millions, Do Little to Increase Work (Center on Budget and Policy Priorities, November 2018). Like many other states, California has sometimes struggled to meet its federal WPR targets. The state has at times been required to submit appeals and corrective plans, but has never had to pay a WPR penalty.

Current state policy would require counties that miss federal WPR targets to pay half of any financial penalty the state received for not meeting targets. This policy incentivizes counties and caseworkers to direct CalWORKs participants into the narrowly-defined activities that count toward meeting the federal WPR. However, the federal WPR does not acknowledge the value of fully supporting parents to address education and health barriers. Many activities to address barriers faced by large shares of CalWORKs participants – that the state approves without time limits for participants to meet state CalWORKs participation expectations – do not fully count toward meeting the federal WPR.

The Federal WPR Does Not Fully Count Activities That Address Barriers Faced by Many CalWORKs Participants

State-Approved Barrier Removal That Does Not Fully Count for Federal WPRShare of CalWORKs Participants Assessed With Need for Barrier Removal
Adult basic education or secondary education (e.g., high school or GED), for participants without a high school or equivalent degreeNearly 1 in 2 heads of household lack a high school or equivalent degree
Mental health servicesMore than 1 in 4 participants recommended for mental health services
Substance abuse servicesAbout 1 in 20 participants recommended for substance abuse services
Domestic abuse servicesMore than 1 in 6 participants recommended for domestic abuse services

*Note: Federal rules limit countable participation in listed education activities to no more than 10 hours per week, and limit countable participation in mental health, substance abuse, and domestic abuse services to no more than four consecutive weeks, not to exceed six weeks in a 12-month period. CalWORKs participant data reflect the share of CalWORKs participants recommended for services to address mental health, substance abuse, or domestic abuse among those completing Online CalWORKs Appraisal Tool (OCAT) assessments during fiscal year 2019-20.
Source: Budget Center analysis of Department of Social Services data, Congressional Research Service

Removing County Liability for Federal WPR Targets Could Better Align State Policy with Recent CalWORKs Reforms

Threatening to penalize counties financially for not meeting federal WPR targets creates an incentive for counties to direct parents away from activities to address barriers that may be their best investments to improve stability and long-term employment prospects – and toward more narrowly-defined “work-first” activities that may not be in families’ best long-term interests but will meet rigid federal WPR criteria. This financial penalty policy therefore works at cross-purposes with extensive recent CalWORKs reform efforts. Repealing this policy could better align state policy with the CalWORKs program’s current focus, facilitating full implementation of strategies designed to effectively support parents and families in securing long-term stability and well-being.

State Policymakers Have Options to Further Build on Recent Reforms to Support CalWORKs Parents and Families

Additional state changes to CalWORKs program rules could extend recent reforms to further bolster support for parents and children. Examples include:

  • Continuing to increase the size of cash grants to enable families to cover their costs to meet basic needs,
  • Expanding policies and practices that help parents avoid and quickly resolve sanctions that reduce access to cash grants,
  • Reducing sanction penalties in order to minimize negative impacts on child and parent basic needs and well-being, and
  • Recognizing county performance that demonstrates strong participant engagement and effectively identifies and addresses participant barriers.

As California’s primary program to help families that are struggling to secure a basic income to meet their needs, CalWORKs provides a unique opportunity to support thousands of children and parents in addressing the challenges of poverty and the barriers put before them. Continuing to align state policy and build on recent reforms can help CalWORKs reach its potential to help ensure that every California child and family can thrive.

Support for this report was provided by the Conrad N. Hilton Foundation.

Don't miss an update.

Join our email list!