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June 01, 2016 12:00 AM

Will Covered California sell plans to undocumented immigrants?

Beth Kutscher
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    State Sen. Ricardo Lara's SB 10 would authorize the California to apply for a federal waiver to allow unauthorized immigrants to buy insurance through the state exchange.

    California is moving to become the first state to allow unauthorized immigrants to purchase insurance through the state exchange. The state Assembly voted Tuesday to open up Covered California to immigrants living in the U.S. illegally who want to purchase a health plan with their own funds.

    SB 10, sponsored by Democratic state Sen. Ricardo Lara from southeast Los Angeles County, would authorize the state to apply for a federal waiver to make the change. The state Senate voted to pass the measure last June and an April staff report from Covered California also expressed support for the move.

    The legislation would be cost-neutral to the state, and the biggest hurdle could well be getting the waiver itself. “The federal government is adamant about not providing any Affordable Care Act benefits to undocumented immigrants,” said Joel Diringer, a San Luis Obispo, Calif.-based health policy consultant at Diringer and Associates.

    Still, he said, the bill's supporters may be rushing to apply for the waiver while President Barack Obama is still in office to avoid the uncertainty of what the next administration might do.

    Patient advocates praised the assembly's action.

    “Beyond the important symbolism of inclusion, this proposal will provide a practical benefit for many California families with mixed immigration status, who will be able to buy coverage together easily, even if some family members are eligible for financial assistance and others are not,” said Anthony Wright, executive director of Health Access California, a consumer advocacy group.

    The next test for the state is a companion bill that would allow undocumented immigrants to apply for Medi-Cal, the state's Medicaid program. The bill, Lara's SB 1418, is likely to see similar support from the Legislature but could face pushback from the governor at a time when the state is already feeling the strain from having one-third of its residents receiving Medicaid benefits.

    Only 36% of the state's unauthorized immigrants would meet the income thresholds to buy insurance from Covered California, while the rest would fall under Medicaid, said Arturo Vargas Bustamante, associate professor of health policy at the UCLA Fielding School of Public Health.

    Moreover, the state would not be able to enforce the individual mandate, which would reduce the incentive for healthy individuals to buy coverage. And the immigrants would not qualify for premium subsidies. The average monthly premium for a silver-tier plan in 2016 was about $309 for an individual and $924 for a family, according to a Commonwealth Fund analysis.

    “Medicaid is the program that makes the most sense to expand first,” Vargas Bustamante said.

    The state already offers emergency and pregnancy coverage to tens of thousands of undocumented immigrants under a restricted-scope Medicaid program. “That's by definition adverse selection because it's people who need services,” Diringer said. “It would be a lot cheaper to pay for the preventive care. That said, you're looking at long-term savings over short-term cost.”

    California Gov. Jerry Brown trimmed the state budget in May for next fiscal year after forecasting lower tax revenue for the state and noting that a recession is “inevitable.”

    Meanwhile, the number of Medi-Cal enrollees is expected to swell to 14.1 million during fiscal 2017, nearly double the 7.9 million enrollees in fiscal 2013. And next year the state will have to pick up 5% of the cost of covering the population eligible under the Affordable Care Act's Medicaid expansion.

    California was estimated to have about 2.5 million unauthorized residents in 2012; far more than any other state, according to the Pew Research Center.

    Yet California in recent years has generally been supportive of extending safety net programs to residents regardless of immigration status. As of this year, all children under age 19 are eligible for Medi-Cal.

    In addition, some counties in the state, such as San Francisco and Los Angeles, already extend health benefits to unauthorized immigrants, Vargas Bustamante said.

    One way the state may be able to cover the cost would be through partnerships with employers since many undocumented immigrants do have jobs, Diringer said. As many as 60% of the state's farmworkers are estimated to be undocumented, and their employers have contributed more than $100 million for health coverage that's generally minimal or only seasonal.

    “There has to be a way … of combining the employer contribution with the potential state contribution,” he said. “But that's not exactly 1418.”

    The bill, meanwhile, is making slow progress through the Legislature where it is working its way through Senate committees. “It's basically a budget issue and that's what's being negotiated right now,” Diringer said.

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