Health insurance in California
- California’s state-run exchange is considered one of the most successful.
- California is implementing an individual mandate and state-based premium subsidies in 2020.
- California’s open enrollment continues through January 15 each year.
- Enrollments completed by Dec. 15 are effective January 1. Enrollments between Dec. 16 and Jan. 15 are effective February 1.
- Eleven insurers are offering 2019 coverage in the California individual market, and all 11 will continue to offer plans in 2020.
- The average premium increase for 2020 is less than 1% — the smallest it’s ever been since CoveredCA opened for business.
- New California law will result in many independent contractors being reclassified as employees as of 2020, and eligible for labor law protections.
- About 1.5 million Californians enrolled in 2019 coverage through the exchange.
- California accepted the ACA’s Medicaid expansion in 2013.
- California law bans the sale or renewal of short-term health insurance as of 2019.
- About 6.2 million Californians were enrolled in Medicare in 2018.
California’s health marketplace
California’s state-run exchange, Covered California, is widely regarded as one of the most successful established under the Affordable Care Act. During the open enrollment period for 2019 coverage, 1.5 million people enrolled in private plans through Covered California
California enacted legislation in 2019 to create a state-based individual mandate and state-based premium subsidy program, both of which will take effect in 2020. The individual mandate will have a non-compliance penalty that mirrors the federal penalty that was in effect in 2018. California has allocated $295 million in state funds to provide premium subsidies to people earning between 400 and 600 percent of the poverty level (ie, people who aren’t eligible for federal premium subsidies), as well as supplemental subsidies for enrollees with income between 200 and 400 percent of the poverty level.
For 2019 coverage and beyond, California enacted legislation that sets open enrollment dates that will differ from the rest of the country. California will continue to have a three-month open enrollment period, running from October 15 to January 15.
So open enrollment for 20209 coverage begins on October 15 and will continue until January 15, 2019 (plans will be available for browsing as of October 1, 2019). People who enroll between October 15 and December 15 will have coverage effective January 1, while those who enroll between December 16 and January 15 will have coverage effective February 1. The same schedule will be used off-exchange as well.
- Anthem Blue Cross of California
- Blue Shield of California
- Chinese Community Health Plan (only San Francisco county and San Mateo county)
- Health Net
- Kaiser Permanente
- A. Care Health Plan
- Molina Healthcare
- Oscar Health Plan of California
- Sharp Health Plan (only San Diego county)
- Valley Health Plan (only Santa Clara County)
- Western Health Advantage (only North Bay area and Greater Sacramento)
The average rate changes for 2020 vary by region in California, but the overall weighted average increase for individual plans is less than 1 percent. The modest rate increase is due in large part to California reinstating an individual mandate that will take effect in 2020.
New California law requires some independent contractors to be classified as employees as of 2020
California AB5, enacted in September 2019, takes effect in January 2020 and will require some businesses to reclassify certain independent contractors as employees (here’s a summary of the legislation). Employees are eligible for various benefits that aren’t provided to independent contractors, including minimum wage ($12/hour in California), worker’s compensation, employer contributions to Social Security and Medicare (FICA taxes), and overtime pay.
And under the ACA’s employer mandate, large employers (50+ full-time equivalent employees) are required to offer their full-time (30+ hours per week) employees health insurance that is affordable and provides minimum value. There is no requirement that coverage be offered to independent contractors, but large employers will have to offer health benefits to people who are newly reclassified as full-time employees.
Employers will generally be able to use the look-back method of determining whether newly reclassified workers are working full-time, which will give them up to a year to make the determination and begin offering coverage to those who work 30+ hours per week (the look-back method is only available for use if an employee is seasonal or has variable hours, but employers would generally be able to consider newly reclassified workers — who have flexible hours and schedule their own worktime — as variable-hour employees.)
Small businesses are not required to offer health benefits under the ACA. But if they do offer coverage, the offer cannot be discriminatory — benefits can only vary based on bona fide employee classifications, so newly-reclassified employees would have to be offered the same coverage as other workers as long as they fall within the same employee classification.
Several industries are exempt from the new law, including doctors, accountants, architects, real estate agents, travel agents, graphic designers, investment advisors, and in some settings, barbers, cosmetologists, and manicurists. Uber and Lyft, which have long battled the issue of employee misclassification, have vowed to challenge the law in court and with a possible 2020 ballot initiative.
But for businesses that are subject to the new law, there is no doubt that more workers will be classified as employees rather than independent contractors starting in 2020. And while that will likely result in some workers becoming newly-eligible for employer-sponsored health insurance, it could also result in people seeing their hours cut to below 30/week so that large employers don’t have to offer them coverage. It could also result in small businesses dropping their employer-sponsored plan altogether and sending their employees to the individual market instead, especially if they know that the bulk of their employees will likely be eligible for premium subsidies in the exchange if and when the employer-sponsored plan is no longer available.
Average premiums for a single employee covered by an employer-sponsored plan amount to more than $7,000 in 2019. For family coverage, the average total premiums exceed $20,000. On average, employers pay the bulk of these premiums, covering about 80 percent of the average single employee’s premium, and about 70 percent of an average family premium. But premiums have been increasing far faster than wages or inflation, making health insurance an increasingly heavy burden for employers.
Depending on the industry, its profitability, and the skillset of its workers — including those currently classified as contractors — some businesses will likely opt to expand their employer-sponsored coverage to include the newly reclassified workers. But others might make changes to their coverage offerings or their employees’ hours in order to avoid the added cost of covering additional workers.
Californians’ enrollment in qualified health plans
Covered California reported that 1,414,668 individuals signed up for qualified health plans (QHPs) during the 2014 open enrollment period. Of that 1.4 million, about 1.1 million individuals paid their premiums and had their coverage take effect.
During the 2016 open enrollment period, there were 439,000 new private plan enrollees through Covered California. As of March 31, effectuated enrollment stood at 1,415,428. Of these enrollees, 87.6 percent were receiving premium subsidies that averaged $309 per month.
During the 2017 open enrollment period, 1.56 million people enrolled in QHPs through Covered California, including 412,000 new enrollees.
During the open enrollment period for 2018 coverage, Covered California signed up nearly 424,000 new private plan enrollees – about 3 percent more than the number of new enrollees who bought coverage the year before. Total enrollment, including renewals, was slightly lower than it had been in 2017, with about 1.52 million people enrolled for 2018 – roughly 35,000 fewer than the year before.
For 2019 coverage, just over 1.5 million people enrolled in private plans through Covered California. This was very similar to 2018’s enrollment total, but the exchange noted that new enrollments had declined considerably, highlighting the need to reinstate an individual mandate in the state. The state enacted legislation during the 2019 session that implements an individual mandate starting in 2020. As a result, the proposed average premium increase for 2020 is the smallest the state has had since ACA-compliant plans debuted.
California embraced the ACA’s Medicaid expansion in 2013, as Gov. Jerry Brown signed legislation that was expected to expand Medi-Cal coverage to over a million Californians.
Between fall 2013 and July 2018, California’s Medicaid enrollment increased from about 7.75 million to about 11.96 million – a 54 percent increase. California’s Medicaid program was the largest in the nation as of late 2017. (About 16 percent of the nation’s Medicaid enrollees were in California).
To learn more about California’s Medicaid program visit the California Department of Health Care Services. Note: California’s Children’s Health Insurance Program (CHIP) was previously known as Healthy Families. In 2013, California transitioned Healthy Families enrollees to Medi-Cal.
Read more about California’s Medicaid expansion.
Short-term health insurance in California
California’s lawmakers passed a bill in 2018 that prohibits the sale or renewal of short-term plans in California as of January 1, 2019. (The sale of other non-ACA-compliant plans, such as fixed indemnity products and critical illness plans, will continue to be allowed.)
Read more about short-term health insurance in California.
How has Obamacare helped California?
California embraced healthcare reform, creating a state-based exchange and expanding Medicaid. And, following the 2014 ACA open enrollment period, the state saw its uninsured rate significantly decline. According to U.S. Census data, the uninsured rate in California dropped from 17.2 percent in 2013, to just 7.3 percent in 2016.
Covered California has also helped Californians lower their prescription medication costs. In 2016, the state exchange rolled out a cap on prescription costs. Available to consumers purchasing off-exchange plans as well, the cap is linked to the metal level of the plan purchased and is $250 per specialty medication per month for the majority of consumers.
California health ratings
America’s Health Rankings, compiled by the United Health Foundation, ranked California 16th overall in 2016, the same spot the state held in 2015. In the 2017 edition of the rankings, California fell one place, to 17th. Air pollution, pertussis, and disparity in health status by education level are the state’s biggest public health challenges. But the state has a low incidence of tobacco use, preventable hospitalizations, and infant mortality.
By comparison, the Commonwealth Fund’s Scorecard on State Health System Performance 2015 placed California 26th, but the state jumped 12 spots, to 14th place, in the 2017 Scorecard, and maintained the same ranking on the 2019 scorecard. While the majority of the state’s health indicators had relatively middle-of-the-road placement, the state fared very well in terms of tobacco use and percentage of the population that suffered from tooth loss (2nd place in both cases). But California ranked 50th in terms of the percentage of children with a medical home.
See California’s Scorecard for additional scoring and details.
The 2016 edition of Trust for America’s Health also evaluates a variety of public health indicators. Visit the site for Key Health Data About California.
Given California’s size and diversity, a statewide view might not provide the level of information you want. Get county-by-county health rankings for California, which were developed by the Robert Wood Johnson Foundation and the Population Health Institute at the University of Wisconsin.
Does California have a high-risk pool?
Prior to the ACA’s reforms in the individual health insurance market, medical history was a factor in eligibility for private plans in nearly every state, including California. Applicants with pre-existing conditions were often unable to buy individual plans in the private market, or if coverage was available it came with a higher premium or with exclusions on pre-existing conditions.
The California Major Risk Medical Insurance Board (MRMIB) was created in 1991 to provide a coverage option for people who were ineligible for coverage under a private plan because of medical history.
Under the ACA, all new health insurance policies became guaranteed issue starting on January 1, 2014. This change largely eliminated the need for high-risk pools, since pre-existing conditions are no longer a barrier to obtaining coverage.
The California Budget Act of 2014 included a provision for MRMIB to cease operations as of July 1, 2014. Most of the MRMIB insureds had already been able to obtain coverage through the exchange or expanded Medicaid, but remaining members were transitioned to the California Department of Health Care Services on July 1.
Medicare in the state of California
Eighty-eight percent of California Medicare recipients qualify based on their age alone, while 14 percent are on Medicare as the result of a disability.
Medicare spends about $9,442 per enrollee each year in California.
Medicare Advantage plans offer additional benefits to Medicare-eligible individuals who want them. Medicare beneficiaries may select a Medicare Advantage instead of Original Medicare, and 43 percent of California’s Medicare beneficiaries were enrolled in Medicare Advantage in 2018.
In 2018, more than 4.9 million Californians had Part D prescription drug coverage. About 2.3 million California Medicare beneficiaries were enrolled in Medicare Part D stand-alone prescription drug plans.
California health insurance resources
- California Association of Health Plans
- California Department of Health Care Services
- California Department of Managed Health Care
- California HealthCare Foundation
- California Nurses Association
- California One Care
- California State Department of Insurance
- Health Access California
Health reform legislation in California
In 2017, California lawmakers considered S.B.562, the Californians for a Healthy California Act. Introduced in February 2017 by Senator Ricardo Lara (D, Bell Gardens) and Senator Toni G. Atkins (D,San Diego), the bill would create a single-payer system in California, although the details of the financing and coverage specifics were not finalized when the bill was brought for consideration. Although the measure passed the Senate in June 2017, the California Assembly pended it indefinitely.
California residents voted on two healthcare-related propositions in November 2016: Proposition 61, The California Drug Price Relief Act, did not pass (it would have prohibited state agencies from paying more for any prescription drug than the lowest price the U.S. Department of Veterans Affairs pays for the same drug). But Proposition 56 passed, increasing the per-pack cigarette tax from $0.87 to $2.87; a majority of revenues are slated to fund health care for low-income Californians.
Here’s a summary of recent legislative action regarding healthcare reform at the state level in California:
- SB4 – The California Senate passed SB4 in early June 2015, the Assembly in September, and on October 9, 2015, Gov. Brown signed it into law. The legislation, renamed the Health for All Kids Act, focuses on Medi-Cal access for undocumented immigrant children under the age of 19. SBF will take effect in May 2016, and it has been estimated that 170,000 undocumented immigrant children will then become eligible for Medi-Cal based on their household income alone.
- SB10 – This bill was introduced in 2015 and was signed into law by Gov. Brown in June 2016. It would have allowed undocumented immigrants to purchase unsubsidized coverage in the exchange, but the state needed a waiver from HHS in order to implement the law (the ACA does not allow undocumented immigrants to purchase coverage in any state’s exchange, even if they pay full price). California submitted a waiver proposal to HHS, but ultimately withdrew the waiver two days prior to President Trump’s inauguration. California State Senator Ricardo Lara (D, Bell Gardens) had introduced and championed SB10, but he requested that the waiver proposal be withdrawn (and Gov. Brown agreed) because the state was concerned that the Trump Administration could use information from the exchange to deport undocumented immigrants.
- AB339 – Signed into law in October 2015, this bill applies to all non-grandfathered individual and small group plans in California. It limits the copayment for a 30-day supply of any medication to no more than $250. It took effect January 1, 2017, and will last until January 1, 2020. For high-deductible health plans, the copay limit will apply after the deductible has been met (Covered California already implemented a similar restriction, starting in 2016).
- California enacted legislation in 2018 to ban short-term health plans and limit enrollment in association health plans.
- In 2019, California enacted legislation to reinstate an individual mandate in California as of 2020, and to create a state-based temporary premium subsidy program.
Other California state-level health reform legislation includes: