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Fact Sheet

Eliminating the Medi-Cal Asset Test

Making Access to Health Care More Equitable and Fair

April 2021 | By Aureo Dias Mesquita

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Millions of California seniors and people with disabilities turn to Medi-Cal — known federally as Medicaid — for essential health care because ableist, ageist, racist, and classist policies and practices have blocked them from access to jobs, income, and wealth that can provide health coverage throughout their lifetimes. These Californians face further discrimination due to an asset test in Medi-Cal that unfairly applies only to people age 65 or older or who have a disability.1 The asset test has strict limits and complex rules that discourage savings, weaken households’ financial stability, and benefit homeowners while putting renters at a disadvantage.

Medi-Cal limits seniors and people with disabilities to assets of no more than $2,000 for individuals and $3,000 for couples — a restriction that has not changed since 1989. Assets include cash on hand, money in a checking or savings account, a second car, and other resources. In addition, seniors must have household incomes that do not exceed 138% of the federal poverty line — $1,482 per month for a single adult or $2,004 for a couple as of 2021.

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State policymakers can eliminate the asset test and help to advance health equity for all Californians.
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Policymakers have chosen to exempt certain assets from counting toward the limit. However, by treating resources differently, they have created an uneven playing field. In particular, a primary residence is exempted from the asset test, benefitting homeowners who may qualify for Medi-Cal even with substantial property wealth. In contrast, California renters — who may have other forms of wealth, such as cash savings — do not benefit from significant exemptions. They may be compelled to “spend down” much of their savings to qualify for Medi-Cal — money they could have used for other purposes such as moving costs, emergency expenses, and financing their retirement.

Among seniors who are income-eligible for Medi-Cal, nearly 2 in 3 Asian and Black Californians live in renter households, as do more than half of Latinx and other seniors of color. Homeowners are disproportionately white and renters are disproportionately Californians of color due to the legacy of racist policies and practices in housing, education, and employment.

Chart title: More Than Half of Seniors of Color with Incomes at or Below 138% of Federal Poverty Line Live in Renter Households

State policymakers can eliminate the asset test and help to advance health equity for all Californians. Nine states plus Washington D.C. have increased their Medicaid asset limits, and Arizona abolished its asset test entirely. California’s Legislature has taken similar action to eliminate or increase asset limits in other support programs and can build upon progress made to help families and communities lead healthy lives.

Support for this Fact Sheet was provided by the California Health Care Foundation.

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More than 6 in 10 California children under the age of 12 live in families where all parents are working.1 For this reason, child care providers are a critical component of the state and nation’s economic infrastructure, ensuring that children have a safe space to learn and grow while parents work. Many providers in California have stepped up to the challenge of delivering care and distance learning support for families during the COVID-19 pandemic and recession — particularly for children with parents who are essential workers. But the state’s child care system is on the verge of collapse.

Already operating on thin financial margins, child care providers are struggling with a loss of income due to reduced enrollment, while facing dramatically increased costs necessary to keep children and staff safe and healthy. Many providers report losing money and turning to personal savings and credit cards in order to sustain operations.2 Since the pandemic began, many providers have closed their doors in California and thousands will not reopen.3 In addition, nearly 3 in 10 jobs in the child care industry have been lost during the crisis.4 These business owners and workers are primarily women and Black, Latinx, immigrant, and other workers of color. The loss of small businesses and jobs coupled with a decrease in child care supply for working families only exacerbates the economic toll of the pandemic on workers of color, women, and their communities.

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Child care providers are struggling with a loss of income due to reduced enrollment, while facing dramatically increased costs necessary to keep children and staff safe and healthy.
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Both the state and federal government have provided emergency funding to support child care providers and families this past year, but total support falls far short of the estimated level necessary to sustain this critical industry. The federal COVID relief package enacted in late 2020 included $10 billion in federal Child Care and Development Block Grant funds. California received $964 million of this funding. Policymakers and the administration must ensure that these one-time federal relief dollars are distributed equitably and without delay to avoid additional closures and layoffs as well as to support working families.

The state’s fiscal health is unexpectedly strong despite the current crisis. Policymakers should also invest one-time funds to help strengthen California’s child care infrastructure and dedicate ongoing funding to help families afford care and to pay providers fair rates. Even prior to the pandemic, 60% of Californians lived in a child care desert with limited access to child care providers.5 California’s economy cannot recover from the shocks of the COVID-19 pandemic until children have a safe place to learn and grow, working parents can return to their jobs, and providers are supported in sustaining the critical child care industry.

Support for this Fact Sheet was provided by First 5 California. 

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As families across California struggle with COVID-19, it is increasingly critical that children have the resources they need at birth to lay the foundation for lifelong well-being.1 Assets such as family, health, and financial resources are strongly associated with child health and resilience, and with fewer harmful experiences such as involvement in the child welfare system.2 When children are exposed to adverse experiences and toxic stress, early intervention tools like evidence-based home visiting can reduce or prevent negative outcomes.3 Home visitors, who are often social workers or nurses, provide parenting support and other assistance that can enhance child and maternal health and improve child development.

However, even before the COVID-19 crisis, too few California children were receiving home visiting support. In the 2018-19 state fiscal year, 41,800 children received federally and locally funded evidence-based or evidence-informed home visits, compared to the estimated 145,800 children ages 0 to 2 who would most likely benefit from such services.4

Now, with families facing significant long-term hardship due to the pandemic and recession, home visitors continue to provide critical support by connecting families to supportive services.5 State policymakers should provide funding to expand home visiting to more families and also increase support for televisits with current clients, many of whom have become less accessible to home visitors.6 Additionally, state policymakers should also support home visitors, who are also facing increased challenges related to COVID-19 and need additional mental health support as they serve families.7

Endnotes can be found in the publication PDF here.

Support for this Fact Sheet was provided by First 5 California. 

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As California students of all ages cannot fully return to classrooms due to the COVID-19 pandemic, learning from home and the technology needed exposes the state’s digital divide. Distance learning requires computers, tablets, or other devices as well as a reliable, high-speed internet connection, but inequitable access to this technology creates a persistent digital divide that disproportionately affects low-income, Black, and Latinx students. This digital divide was affecting students’ academic achievement before the pandemic, and distance learning has likely exacerbated these existing disparities.

Prior to the pandemic more than 1 in 5 students in California — roughly 1.4 million — did not have access to either a computer or high-speed internet. Black and Latinx students were more likely to lack access, nearly 3 in 10 — more than double the share of white (13%) and Asian and Pacific Islander (12%) students. Of the students affected by the digital divide, 57% spoke a language other than English at home and 56% were eligible for free and reduced-price meals ­— indicators that point to even greater need for educational assistance.

State and local leaders have made efforts to help students connect with their teachers and engage in distance learning. The 2020-21 enacted budget provided $5.3 billion in state and federal dollars to local education agencies (LEAs) for learning and student supports, including computers and hotspots. Currently, it is unclear how much LEAs allocated specifically for computers and internet connectivity and whether those funds were distributed equitably.

The number of students with computing devices has improved with fall 2020 estimates showing a 12 percentage point increase for households with school-age children as compared to the spring.1 But the disparities in access to a reliable internet connection for most student groups, including Latinx and low-income households, remain mostly unchanged.2 A Legislative Analyst’s Office analysis highlights the same inequities in broadband adoption rates between low-income households (53%) and higher income households (86%) even before the pandemic.3

The need for greater investment to address the inequities in distance learning is clear. California policymakers must consider options to invest in distance learning and carefully target resources for students most affected by the pandemic. This includes more data collection to better identify gaps in access and to ensure Black, Latinx, English language learners, and low-income students have the resources they need to learn. A device and high-speed internet access are necessary to engage in distance learning, and without both, the digital divide and academic opportunity gap will only grow wider for California students of all ages.

Endnotes can be found in the publication PDF here.

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Education

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Right now, many families do not have enough food on the table, and this problem is particularly acute for Latinx and Black families in California. Even before the COVID-19 pandemic, about 1 in 10 Californians sometimes or often lacked access to enough food to support a healthy lifestyle.1 Struggling to have enough food affects people of all ages, but it is especially harmful to children, as inadequate nutrition can harm their health, development, and learning.2

Due to historic and ongoing racial discrimination, Black and Latinx families have always struggled to afford enough food, and the COVID-19 health and economic crisis has only made this problem worse.3 Data from the Census Bureau’s weekly Household Pulse Survey provides information on how COVID-19 is affecting families. In California, about 1.9 million households with children (15.9%) reported sometimes or often not having enough food to eat during a four-week period in late June and July. Latinx and Black households were more likely to lack enough food at home, with more than 1 in 5 Latinx households and Black households with children reporting sometimes or often not having enough to eat (21.9% and 20.2%, respectively).4

Latinx and Black Households With Children Are More Likely to Lack Enough Food During the COVID-19 Pandemic

Families struggling to afford enough food underscores the need for federal policymakers to help Californians during the ongoing health and economic crisis. Federal policymakers should ensure families have the resources they need to feed their families, including:

  • Increasing the maximum Supplemental Nutrition Assistance Program (SNAP) benefit, known as CalFresh in California, by at least 15%, which would boost benefits by about $25 per person per month.5 In addition, federal policymakers should expand food assistance to immigrants who are excluded from SNAP – many of whom are Latinx.
  • Extending Pandemic Electronic Benefits Transfer (P-EBT) through the 2020-21 school year. P-EBT is a one-time disaster response program that supports children who lost access to free or reduced price school meals due to school closures, but will expire at the end of September.6 P-EBT was one of the few programs that provided food benefits to children regardless of immigration status.
  • Helping families with younger children afford food by adding the Child and Adult Food Care Program to P-EBT, so those who lost access to federally funded meals when child care programs closed can receive support.
  • Investing in programs like virtual home visiting, which can connect families to food banks, food assistance, and other resources that help put food on the table.7

During this health and economic crisis, families should not agonize over having enough food at home. Children should never worry about when they will eat again. Policy inaction will only worsen racial health and educational disparities in California. It is critical that policymakers invest in programs that protect and promote children’s health and well-being.

Support for this Fact Sheet was provided by First 5 California.

Covid-19
Health & Safety Net

1 Feeding America, Food Insecurity in California, accessed http://map.feedingamerica.org/county/2018/overall/california on September 1, 2020.
2 Feeding America, Map the Meal Gap 2020, accessed https://www.feedingamerica.org/sites/default/files/2020-06/Map%20the%20Meal%20Gap%202020%20Combined%20Modules.pdf on September 1, 2020.
3 Angela Odoms-Young, et al., “Examining the Impact of Structural Racism on Food Insecurity: Implications for Addressing Racial/Ethnic Disparities,” Family & Community Health 41 (2019), pp. S3–S6.
4 These figures represent multi-week average estimates from the Census Bureau’s Household Pulse Survey data: Table 3b Food Sufficiency for Households with Children, in the Last 7 Days. Data for Week 9 Household Pulse Survey were collected between June 25 – June 30, Week 10 data were collected July 2 – July 7, Week 11 data were collected July 9 – July 14, and Week 12 data were collected July 16 – July 21. Estimates do not include those who did not respond. Due to small sample sizes, some demographic groups were combined into the Multi-Race and Other Races category. This category reflects people identifying as American Indian, Alaska Native, Native Hawaiian or Pacific Islander, or more than one race. Race and ethnicity refers to the respondent who answered questions for the household.
5 Brynne Keith-Jennings, Heroes Act Provides Much-Needed SNAP Boost (Center on Budget and Policy Priorities: May 18, 2020).
6 California Department of Social Services, Pandemic EBT, accessed https://www.cdss.ca.gov/home/pandemic-ebt on September 2, 2020.
7 Jennifer Marshall, et al., “Statewide Implementation of Virtual Perinatal Home Visiting During COVID-19,” Maternal and Child Health Journal 24 (2020), pp. 1–7.

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During this unprecedented health and economic crisis, many subsidized child care providers in California have stepped up to the challenge of providing early learning and care for families with low and moderate incomes – particularly for children with parents who are essential workers. While the state and federal government have both provided emergency funding to support subsidized child care providers, total support falls far short of the estimated level necessary to sustain child care providers. In addition, the Governor’s May Revision would cut provider payment rates by 10%. These rate cuts could be detrimental for child care providers who were already underpaid and operating on thin margins prior to the COVID-19 pandemic. Now, during this crisis, providers are faced with dramatically higher costs due to smaller class sizes, increased staffing per child, and the added expense of keeping facilities clean as they care for and educate children.

Subsidized child care providers are paid in one of two basic ways: by contracting directly with the state or by accepting vouchers from families. Providers who accept vouchers are reimbursed based on the Regional Market Rate (RMR) Survey, which provides “rate ceilings” for all 58 California counties by the type of care and the age of the child. The rate ceilings in use in the 2019-20 state fiscal year are based on the 75th percentile of the 2016 survey. In theory, this should allow families to access 75 out of every 100 providers in their county. However, because the state is currently using an outdated survey, families are able to access far fewer providers.

A 10% decrease to the current, outdated rate ceilings would further restrict families’ access to care. For example, in Los Angeles County where one-quarter of children eligible for subsidized child care live, the proposed rate ceiling for full-time, center-based care for an infant would be $1,435 per month, which means that families would have access to just 54% of providers in their community based on the most recent survey from 2018. Across California, the proposed rate ceilings for many counties would fall far short of the 75th percentile benchmark from the most recent survey.

Providers that contract directly with the state are reimbursed with a statewide rate called the Standard Reimbursement Rate, which is adjusted based on different factors such as the age of the child. Contract-based providers have to meet quality standards, in addition to meeting the health and safety standards that voucher-based providers are held to. Given the additional standards required by the state, a higher rate should be provided for contract-based providers. However, in 14 counties contract-based centers caring for preschool-age children are paid at a monthly rate that is less than vouchers for center-based providers. One reason for this is because policymakers have not consistently increased the Standard Reimbursement Rate each year, and this key payment rate has lost value over time. A 10% cut would erase some of the gains made after the Great Recession in boosting the Standard Reimbursement Rate.

Child care providers’ ability to offer subsidized care depends, in part, on the state’s reimbursement rates. When providers are not paid at a level that allows them to operate their businesses, attract and retain qualified staff, and afford materials and supplies to educate children, they may be unable to offer care to families with low incomes. Some may be forced to permanently close their doors.

While the May Revision proposes to use $125 million in federal emergency funds to provide one-time stipends to subsidized providers, the value of these stipends will likely fall far short as compared to the long-term loss in income due to the Governor’s proposed 10% payment rate cut. In the meantime, California could lose an invaluable number of child care providers and diminish families’ access to care.

Child care providers are offering early learning and care for thousands of California children and are playing an outsized role as essential workers who ensure that other vital workers in our communities can go to work. Policymakers should use all available funds to stabilize subsidized child care providers by providing stipends for increased costs as proposed in the May Revision and maintaining provider payment rates. This is critical to helping providers survive the COVID-19 crisis, supporting families with low incomes who must leave their homes to work, and aiding the state’s economic recovery.

Support for this work is provided by First 5 California. 

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The share of California corporate income paid in state taxes declined by more than half during the past three decades. In the early 1980s, corporations that reported profits in California paid more than 9.5% of this income in state corporation taxes. In contrast, corporations paid just 4.2% of their California profits in corporation taxes in 2017, the most recent year for which data are available. California’s state budget would have received $11.2 billion more revenue in 2017 had corporations paid the same share of their income in taxes that year as they did in 1981 – more than the state spends on the University of California, the California State University, and student aid combined.

Corporations pay less of their income in taxes today – even amid the COVID-19 economic crisis – than they did in the 1980s in part due to the reduction of tax rates by state policymakers. Since increasing the corporate tax rate to 9.6% in 1980, the Legislature has cut the rate twice: from 9.6% to 9.3% in 1987 and from 9.3% to 8.84%, its current level, in 1997.

In addition to cutting tax rates since the 1980s, state policymakers have enacted several corporate tax breaks that reduce the share of income that corporations pay in California corporation taxes. For example, beginning in 1987, California allowed multinational corporations to lower their tax liability by calculating their California income based on either their total income from worldwide operations or only from their operations within the US. This so-called “water’s edge” election will cost the state an estimated $2.4 billion in 2019-20. Also in 1987, state policymakers established the state’s research and development (R&D) tax credit, which primarily benefits large corporations and will cost the state an estimated $1.8 billion in 2019-20. As with many corporate income tax credits, the amount spent on the R&D credit each year is unlimited, and there is no expiration date. In total, California is projected to spend $5.7 billion on tax expenditures for corporations in 2019-20.

California spending on tax breaks for corporations far exceeds the amount the state spends on tax benefits for low-income Californians. In 2019, California was projected to spend $1 billion on the state’s two largest tax credits targeted to Californians with low incomes – the California Earned Income Tax Credit (CalEITC) and the Young Child Tax Credit (YCTC). The CalEITC and YCTC boost the incomes of families and individuals with annual earnings of less than $30,000, a large majority of whom are people of color. The CalEITC alone directly benefited 3.7 million Californians in 2018. One example of how tax credits, exemptions, and deductions could be more equitably targeted is to extend the CalEITC and YCTC to all immigrant families. The Legislature could pay for the extension of the CalEITC and YCTC to these immigrant families by eliminating or reducing tax breaks for corporations that can afford to contribute more.

Corporations can contribute more not only because they are paying less than half the amount in state taxes than they did three decades ago, but also because they are likely to pay far less of their income in federal taxes due to the federal Tax Cuts and Jobs Act (TCJA), signed by President Trump in 2017. The TCJA made several changes to federal tax law that benefit corporations, including slashing the federal corporate income tax rate from 35% to 21%, the largest one-time reduction in US history. The Institute for Taxation and Economic Policy (ITEP) estimated that the tax benefit to California corporate business owners was more than $13 billion in 2018. The reduction in federal corporate taxes may argue for an increase in the state’s corporate income tax rate. However, policymakers have other options for ensuring that corporations pay their fair share in state taxes. For example, they could review existing corporate tax provisions, such as corporate tax credits, exemptions, and deductions, and reduce or eliminate those that are not achieving the state’s policy goals. By reducing spending on corporate tax breaks, the state would have more resources available to support families with low incomes who are struggling to afford the costs of living in California, COVID-19 crisis or not.

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Taxes & Revenue

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On a given night, more than 150,000 Californians are homeless. These individuals face significant risk of exposure to COVID-19 and serious barriers to following stay home orders to limit the spread of infection. Due to older ages and high rates of physical health conditions, they are also at high risk of severe complications or even death from the virus. Black Californians are greatly overrepresented among homeless individuals, making their health especially endangered by COVID-19. Policymakers should make sure the urgent housing and health needs of Californians who are homeless are met, to protect their health and the broader public health and to address racial health disparities exacerbated by this pandemic.

  • Nearly 3 in 4 Californians experiencing homelessness are unsheltered– living on the street, in cars, or in other places not meant for habitation. Lack of proper housing makes it impossible for these individuals to follow stay home orders or even practice basic hygiene, such as washing their hands.
  • Social distancing and self-quarantine are also a challenge for Californians staying in emergency shelters and transitional housing, due to shared sleeping, eating, bathroom, and living spaces.
  • The lack of housing and inability to consistently follow public health recommendations puts Californians who are homeless at greater risk of contracting COVID-19. This also hinders statewide efforts to stop the virus from spreading.

  • Older adults are at high risk of developing severe health complications from COVID-19. According to the US Centers for Disease Control and Prevention (CDC), adults age 50 and over have the highest rate of hospitalization due to COVID-19 — and those age 55 and older accounted for 92% of provisional COVID-19 deaths as of April 21, 2020.
  • Even prior to the pandemic, the aging of the homeless population meant that older adults are now – and will continue to increasingly be – a large portion of Californians experiencing homelessness. In Los Angeles County, about 2 in 5 homeless adults are older than 50.
  • Further, homeless individuals demonstrate rates of illnesses and geriatric conditions on par with or higher than adults with stable housing who are 20 years older, increasing their risk of complications from COVID-19.

  • People with chronic health conditions also tend to have worse COVID-19 outcomes. A preliminary study by the CDC found that adults with COVID-19 who had at least one  underlying health condition or risk factor were significantly more likely to require  hospitalization or ICU admission, compared to those who did not.
  • In addition, experiencing homelessness exacerbates existing health conditions and can lead to new ones, such as chronic illnesses and infectious and communicable diseases. In a national study of homeless single adults, more than 8 in 10 unsheltered individuals (84%) reported having at least one physical health condition.

  • Racial disparities linked to current and past discriminatory policies and practices are startlingly apparent in Black Californians’ overrepresentation both within the homeless population and among severe health outcomes and deaths related to COVID-19.
  • While Black Californians only comprise 6% of the state population, nearly 1 in 3 individuals experiencing homelessness are Black, and therefore face high risk of COVID-19 exposure and significant barriers to preventing and addressing infection.
  • Black Californians accounted for 12% of COVID-19 related deaths statewide as of April 19, 2020 — double their share of the state population. In Los Angeles County, where 1 in 11 residents (9%) are Black, they have accounted for 1 in 6 deaths (16%) due to COVID-19 as of April 18, 2020.

Federal and state policymakers have taken initial steps to address the needs of Californians experiencing homelessness during the COVID-19 crisis, such as providing support to house some individuals in hotels and allocating funds to local jurisdictions to address local homeless services needs. This support for individuals without a permanent home will be needed as long as the pandemic lasts. It is also critical to ensure that Californians at high risk of severe COVID-19 health outcomes – including older adults and individuals with chronic health conditions – do not fall into homelessness. Strong interventions are also important to avoid further exacerbating the disproportionate burdens of homelessness and COVID-19 among Black Californians. Given the high risk and devastating consequences for both individuals’ health and broader public health efforts, policymakers should prioritize the urgent COVID-19 health and housing needs of homeless Californians, while taking steps to address the state’s long-term homelessness challenges and racial health disparities.

Covid-19
Housing & Homelessness

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