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This research was supported with funding from the California Health Care Foundation.

Telehealth visits rose markedly in response to the pandemic, with patients turning to health care by phone or video for their routine checkups, dermatology, and eye exams as well as screening for COVID-19. By increasing telehealth, California may be able to expand health care access for rural residents, persons with disabilities, and low-income individuals—who may lack transportation or the flexibility to leave work for appointments. Although underserved groups stand to gain from more telehealth, in the past they have lagged in taking up virtual health care.

One reason may be a lack of access to fast internet—both rural and low-income Californians are less likely to have broadband, though a $7 billion federal investment in connectivity along with earlier relief funds could transform the broadband infrastructure landscape. Language barriers are another concern. Patients with limited English proficiency were already less likely to use telehealth in California, and the need for appropriate language services is pressing. The pandemic also brought competing demands on bandwidth and devices as household members work from home, attend school, or meet other daily needs online.

Yet telehealth has expanded, even for hard-to-reach groups. A group of community clinics, which serve many low-income patients in California, went from conducting less than 1% of their patient encounters through telehealth in February 2020 to around half of encounters just a few months later. Low-income patients are more likely to have telehealth visits by phone rather than video compared to higher-income Californians. And it is promising that they are satisfied with the telehealth experiences they have, and want to continue using the tool.

figure - Low-Income Adults in California May Rely More on Phone-Based Telehealth

Furthermore, telehealth has become a vital tool for delivering behavioral health, including individual or group therapy. For many, the pandemic brought isolation, coronavirus-related worries, and financial difficulties even as it reduced access to familiar supports and routines. The consequences include poor mental health and surging drug overdoses. Low-income Californians were more likely to report worse mental health since the start of the pandemic, suggesting high need for behavioral health services.

Both private health insurance companies and public programs like Medi-Cal and Medicare have demonstrated flexibility in reimbursing telehealth visits, easing worries over what is covered while allowing out-of-state providers to treat patients in California. Such flexibility helped augment a strained supply of behavioral health services that pre-dated the current crisis. However, changes to licensing requirements will be needed to continue some of these relationships.

The state’s plans for after the pandemic signal an ongoing commitment to telehealth and its role for underserved groups. The Department of Health Care Services, which runs Medi-Cal, has proposed extending many temporary telehealth changes, including some phone-based care important to low-income patients. Telehealth’s promise in California is most likely to be realized through policies like these that prioritize health equity along with expansion.

    • The pandemic may not have increased California’s uninsured rate.
      While we still do not know the exact impact of the pandemic on health coverage, available evidence suggests that sizable employment losses in 2020 may not have affected uninsured rates much. Nationally, estimates indicate the uninsured rate did not change in the first half of 2020 and analysis of administrative data suggests losses in employer-based insurance were small and may have been offset by enrollment in Medicaid. In California, we have seen steady increases in Medi-Cal (California’s Medicaid program) enrollment since April 2020, with caseloads about 9% larger in January 2021 compared to January 2020.

Expanded Medi-Cal coverage is responsible for much of the decline in the uninsured rate

figure - Expanded Medi-Cal coverage is responsible for much of the decline in the uninsured rate

SOURCES: American Community Survey (ACS), 1-year PUMS, 2010–2019. California Department of Health Care Services, Medi-Cal Certified Eligibles Tables by County, 2010 to Most Recent Reportable Month (March, 2021), downloaded from the CHHS Open Data Portal. California Department of Finance (DOF).

NOTES: Uninsured rates are based on self-reported survey data from the ACS and are subject to greater error than the administrative data used for the Medi-Cal coverage rate, which shows annual January Medi-Cal enrollment counts, excluding undocumented immigrants in limited scope Medi-Cal, divided by annual state population estimates.

    • ACA coverage expansions likely helped keep many Californians insured.
      After coverage expansions under the Affordable Care Act (ACA) took effect in 2014, California’s uninsured rate declined substantially from 17% to about 7%, where it has held steady since 2016. California’s decision to expand Medi-Cal to cover most low-income adults without children or a qualifying disability was responsible for much of these gains. As of January 2021, Medi-Cal provided comprehensive health coverage to about 12.6 million residents, nearly one-third of the state’s population. Most Californians with low and moderate income levels who do not qualify for Medi-Cal can purchase health insurance through Covered California, the state’s insurance marketplace, and receive federal and state subsidies to cover the costs. Between 1.2 and 1.6 million Californians annually have purchased health insurance through Covered California since its creation in 2014.
    • ACA reform has been linked to improved outcomes.
      A substantial body of research generally agrees that ACA Medicaid expansions improved access to and use of health care, reduced disparities across racial/ethnic, income, and education groups, and increased financial security for individuals and hospitals. Recent studies have shown that Medicaid expansion is associated with decreased mortality overall and for certain conditions; it has also been linked to reductions in poverty rates, food insecurity, and home evictions.
    • California passed state-level reforms to protect ACA coverage gains . . .
      In response to the Trump administration’s repeal of the individual mandate (the requirement that people have health insurance or pay a tax penalty) and funding cuts for outreach and enrollment, California passed state-level health reforms to protect its coverage gains. These included offering state subsidies to purchase insurance though Covered California and the creation of a state individual mandate. In 2020, new state subsidies that averaged $500/month helped about 32,000 higher-income Californians (making up to $75,000 for an individual) who were ineligible for federal subsidies purchase a plan through Covered California.
    • . . . but significant gaps in health coverage remain.
      In 2019, the most recent data available, about 3 million Californians were uninsured. Latinos have uninsured rates more than double those of other racial/ethnic groups and comprised about 2 million of the Californians without health insurance in 2019. Undocumented immigrants are a large group of the uninsured population as they are excluded from most federally funded coverage. High uninsured rates among noncitizens underscore this inequity. Low- and moderate-income Californians, along with working-age adults, continue to have higher uninsured rates, despite being the target of ACA coverage expansions.

Latinos, low- and moderate-income residents, and noncitizens have higher uninsured rates

figure - Latinos, low- and moderate-income residents, and noncitizens have higher uninsured rates

SOURCE: American Community Survey, 1-year PUMS, 2019.

NOTES: “FPL” refers to the federal poverty level. Estimates exclude people in group quarters. ACS indicates whether person was uninsured at the time of the survey, not the entire year.

  • California may have opportunities to further expand coverage in the coming years.
    The Biden administration has signaled support for furthering health reform at the national level. The recently passed American Rescue Plan Act increases federal premium subsidies for people at every income level. Covered California estimates about 2.5 million Californians could benefit from enhanced subsidies for the next two years. These and other federal reforms could invigorate California’s efforts to provide coverage to all residents through a state-based, unified financing system. Several challenges would remain, but exploring ways to expand coverage—and ensure all Californians can access needed medical care—will be crucial as the state emerges from the pandemic, especially if equity is to be a focus of the recovery.

 

Sources: Cohen and Terlizzi, “Health Insurance Coverage” (National Center for Health Statistics, 2021); McDermott et al., “How Has the Pandemic Affected Coverage in the US?” (Kaiser Family Foundation, 2020); Ruggles et al., IPUMS USA: Version 11.0 [dataset] (University of Minnesota, 2021); Guth, Garfield, and Rudowitz, “The Effects of Medicaid Expansion under the ACA” (Kaiser Family Foundation, 2020); “New California Policies Make Huge Difference,” news release (Covered California, 2020); “Covered California Opens the Doors,” news release (Covered California, 2021).

Supported with funding from the Californian Health Care Foundation

We gratefully acknowledge the support of the PPIC Corporate Circle and the PPIC Donor Circle.

The Supreme Court heard oral arguments today on California v. Texas, another challenge to the Affordable Care Act (ACA). At issue is whether the ACA’s individual mandate—which requires most Americans to have health insurance or pay a tax penalty—is constitutional now that the 2017 tax bill has reduced the penalty to zero, and whether this, in turn, makes the ACA as a whole unconstitutional. A ruling that invalidates the ACA—or parts of it—could have far-reaching consequences for California.

Since California implemented coverage expansions under the ACA in 2014, its uninsured rate has been cut in half. Most of the coverage gains resulted from increased eligibility for the Medi-Cal program, which now insures more than 13 million Californians. More than 1 million Californians rely on Covered California, the state’s ACA insurance marketplace, for health insurance, and nearly 90% of these enrollees receive federal subsidies for coverage and care.

California’s coverage gains might not be in jeopardy if only parts of the law are deemed unconstitutional. For example, the court could find the individual mandate unconstitutional, but decide to invalidate only certain portions of the ACA that are “non-severable” from the mandate. This could include insurance market reforms that guarantee insurance coverage regardless of health status or pre-existing conditions and prevent insurance companies from charging more based on health status. Other ACA market reforms that could be eliminated in this scenario include limits on patient cost-sharing, no annual and lifetime coverage limits, and the requirement that insurers spend at least 80% of premium revenues on patient care (medical loss ratio).

California has enacted state laws that could protect some of these market reforms (e.g., cost-sharing limits), but the main safeguards for Californians with pre-existing conditions are contingent on federal law under the ACA. California also adopted a state individual mandate that has been credited with keeping down insurance premium increases in Covered California, but it could face legal challenges depending on the court’s decision.

If the court invalidates the ACA in its entirety, California’s health coverage gains would be in jeopardy, since federal funds support the vast majority of coverage expansions. It would probably take time to unwind the ACA coverage expansions—but the number of uninsured Californians would rise dramatically. And California’s hospitals and safety net providers would lose much of the financial stability that ACA reforms have provided.

State lawmakers have plans to protect ACA reforms and expand affordable coverage options for all Californians. But California, like all states, will continue to rely heavily on funding from the federal government.

President-elect Biden wants to strengthen ACA coverage expansions and protections. The new administration could move in this direction via executive actions and federal regulatory changes, but major new provisions—such as a new public option—would require Senate approval. And any of the new administration’s plans will have to contend with the Supreme Court’s decision in this case and future legal challenges.

As the legislature and the governor grapple with the projected budget shortfall, it is clear that California lawmakers are expecting Medi-Cal enrollment to increase substantially as a result of COVID-19. While it is difficult to predict the size of the enrollment surge or its budget implications, a look at pre-pandemic coverage patterns offers some insights.

First, the predictions on enrollment size and costs. The governor’s May budget revision projects that the state Medi-Cal caseload will peak at 14.5 million in July. If enrollment does rise to this level, it would mean 2 million more people in the program since January, when Medi-Cal enrollment stood at about 12.3 million.

The legislative budget committees generally agree with the increased caseload projections. However, they rely on the Legislative Analyst’s forecast of the caseload mix, which includes fewer seniors and people with disabilities—groups with more medical needs and much higher costs—than the governor’s estimates. The LAO projections result in state costs that are $750 million lower in the current and next fiscal year than the governor has estimated.

The governor’s revised budget relies on estimates from the Department of Health Care Services that Medi-Cal will have 1.4 million additional monthly enrollees as a result of high unemployment and another 200,000 resulting from the suspension of eligibility redetermination throughout fiscal year 2020–21. This is in line with estimates from a recent Kaiser Foundation analysis that suggests 2 million Californians who lose health coverage as the result of pandemic-related job loss will be eligible for Medi-Cal.

But not everyone who becomes eligible will enroll, particularly if they have no immediate health needs and expect to return to work relatively soon. Preliminary Medi-Cal caseload counts released last week show no increase in enrollment through mid-May; although the final count may be higher, this suggests that the surge may not be as large as anticipated.

Pre-pandemic coverage patterns can provide some useful context. Many of the hardest-hit industries in terms of job loss had low rates of employer-based coverage and relatively high uninsured rates and Medi-Cal enrollment before the pandemic.

Most notably, more than 40% of workers in the accommodation and food services sector—in which employment declined nearly 50% over the past two months—were either uninsured or covered by Medi-Cal. Another 12% had purchased coverage, most likely through Covered California. Other hard-hit sectors—including construction and retail trade—also have relatively high shares of workers who were either uninsured or enrolled in Medi-Cal over the past few years. These patterns suggest that some workers are unlikely to be part of the enrollment surge.

High uninsured rates in some sectors—most notably construction and food services—may be a sign that some workers are undocumented and not eligible for Medi-Cal (except those ages 19–25, who recently gained eligibility through state legislation). Also, workers in many hard-hit industries tend to be relatively young (for example, half of adult workers in food services are under 30); these younger workers may be forgoing coverage because they are healthy.

figure - Many Workers in Industries Hit Hardest by the Pandemic Were Already Uninsured or Covered by Medi-Cal

As California moves through the COVID-19 crisis and reopens its economy, it will be crucial to assess how health insurance coverage has changed. Prior to the pandemic, the governor convened a committee to investigate pathways to universal coverage through a state-financed system. The current crisis will likely put this and other major policy changes on hold, and the November presidential election will have implications for health policy. Still, it is important for the state to consider ways to strengthen its health coverage system so that it can weather future public health and economic crises.

Supported with funding from the Californian Health Care Foundation

Under the proposed expansion of Medi-Cal to undocumented seniors, vulnerable Californians would gain comprehensive health insurance. The policy improves access to care for individual seniors and could alleviate the financial burden on counties that serve undocumented immigrants in indigent care programs, increasing resources for other low-income groups.

The senior population in California is projected to increase by over 2 million in the next decade, dramatically outpacing growth of younger groups in a demographic shift known as the Silver Tsunami. This increase, in particular among those in older age groups (75 to 84), will test California’s health care delivery and financing systems, because seniors are more likely to be disabled and to have complex or multiple health conditions than younger groups.

Figure - California’s Senior Population Is Projected to Grow by More than One-Third in the Next Ten Years

While most California seniors have health insurance—with Medicare being the most common—not all seniors have coverage. Many uninsured seniors are likely to be undocumented, making them ineligible for Medicare or to purchase coverage through Covered California, the state’s health insurance marketplace. These same seniors may have limited finances and therefore also are likely to struggle to access and afford health care.

Currently, most uninsured, undocumented seniors rely on safety net providers and a limited form of Medi-Cal that covers only emergencies, along with indigent care programs in certain counties that choose to cover undocumented immigrants. Under the expansion, these seniors would gain access to full-scope Medi-Cal, connecting them to preventive care and to programs to improve their disease management. Some expansion funds would also apply to the In-Home Supportive Services (IHSS) program, which pays for a caregiver—often a relative—to provide support for a senior to continue living at home rather than entering a costly long-term care facility.

The budget estimates state costs of $320 million for the expansion, which would benefit 27,000 individuals. If enacted, the policy could have implications for local finances. Counties in California provide health care and mental health services to the medically indigent, with some areas—most notably Los Angeles—serving undocumented immigrants. These county programs, together with community clinics and emergency rooms, are essential access points to health care for undocumented, uninsured seniors. If undocumented seniors become eligible for full-scope Medi-Cal, the state would finance their care instead of the county, where applicable. This shift could free up funding that could then be invested in other health-related county responsibilities, such as disaster preparedness, prevention activities, and substance use disorder treatment.

A complicated fiscal relationship between the state and counties, however, makes it difficult to estimate how much funding could be redirected if this group of seniors gain access to Medi-Cal. As state lawmakers consider the policy change, it will be important to consider how it may affect local and state finances.

We gratefully acknowledge the support of the PPIC Corporate Circle and the PPIC Donor Circle.

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