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The state has passed a budget and it includes provisions that will keep out-of-pocket costs low through the state’s marketplace for health insurance.
Gov. Gavin Newsom signed a $308 billion state budget that includes $17 billion worth of inflation relief and $53.9 billion in climate investments. The budget also included language from Assembly Bill 1878, introduced by Assemblymember Jim Wood (D-Santa Rosa), which allows Covered California to continue providing subsidies that were initially made possible by federal COVID-19 relief funding.
“Covered California continues to offer affordable health care coverage with generous premium subsidies and low or no copays made possible with the federal funding provided in the American Rescue Plan,” Wood said in a statement. “That federal funding ends at the end of 2022 unless the American Rescue Plan is extended, but the state budget, signed by Gov. Newsom, includes language from my bill, AB 1878 as well as necessary funding so that Covered California can continue to offer Californians affordable coverage while we continue to push Congress to extend the ARP.”
For consumers who purchase the “silver plan” through Covered California, that means zero deductibles and lower cost-sharing for anyone making up to 600% of the federal poverty level, which is around $81,540 for a household of one and $109,860 for a family or household of two.
The continuation of the subsidies hinged on the passage of the Build Back Better plan in Congress when Wood first announced his legislative health care priorities for the year in February. That legislation died in the Senate, but the subsidies can continue whether or not the American Rescue Plan is extended.
On Thursday, Newsom also signed Wood’s priority health care bill this year, AB 1130, which creates the Office of Health Care Affordability. The purpose of the office is to develop cost targets for the health care industry by collecting data from companies in the industry.
“This office will require all health care entities that are dominant in an area that has a significant impact on pricing — including health care service plans, health insurers, hospitals, and physician organizations — to provide that data this office will need to contain costs, data we don’t currently have,” Wood said.
A 2021 survey done by the California Health Care Foundation found, on average, 28% of people said they had a hard time paying their premiums, 31% had a hard time paying out-of-pocket costs, 22% of people delayed or avoided care because of the cost, and 28% reported cutting necessities, borrowing money or both as a result of health care costs.
“Bottom line, health care is too expensive, its growth rate is unsustainable and we have to do something,” Wood said. “This is my most important work to date. The creation of OHCA has been a true partnership with Gov. Newsom and his administration, my colleagues in the Assembly and Senate as well as a collaboration of many stakeholders including the health care entities that will be required to provide data as well as the people who are paying for and receiving care.”
California is taking other steps to make health care more affordable, too, like investing in making its own insulin. All of these moves came after a plan for statewide single-payer health care known as CalCare, championed by the state nurse’s union, was quashed at the start of the year.
Sonia Waraich can be reached at 707-441-0504.
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