How California is Expanding Obamacare Coverage and Why

paper with obamacare aca coverage and gavel for california

Earlier this month, California lawmakers approved an expansion of the Affordable Care Act (also known as Obamacare) within the state. Although this falls short of the kind of universal healthcare progressive lawmakers desired, it’s also seen as a compromise with moderate Democrats, a stepping stone to a single-payer system, and a controversial decision. 

The California Obamacare expansion primarily will do three things. It will:

  • Raise the poverty threshold to cover middle-class Californians, 
  • Restore the individual mandate, and
  • Cover some undocumented adults through Medicaid (Medi-Cal). 

Poverty threshold

Under Obamacare, a person earning four times the poverty level does not qualify for healthcare subsidies, or assistance in paying for healthcare. This is about $50,000 for an individual. California’s expansion will raise that limit to six times the poverty level, or $75,000 for an individual. This will allow almost 200,000 more Californians to access health coverage. 

It should be noted that poverty is relative to geography. For example, due to the high cost of living there, the U.S. dollar does not stretch as far in California as it might in Alabama.

The individual mandate

The Obamacare individual mandate (also known as the shared responsibility payment) meant you had to purchase a health plan if you could afford to do so, or else face a penalty. This was eliminated by Congress in 2017

However, California lawmakers reinstated it within the state in order to pay for the Obamacare expansion. Health policy experts expect the mandate to generate an estimated $295 million in the upcoming fiscal year, and as much as $380 by 2022. 

One controversial point of the mandate being reinstated is that the generated funds will partially go to cover undocumented immigrants living and working in California. Undocumented immigrants received about $98 million in Medicaid coverage this year alone. 

Middle ground to Medicare for All

Although California governor Gavin Newsom says he has every intention of moving the most populous state in the country to a single-payer system like Medicare for All, this is the most pragmatic step toward that goal. 

Chris Jennings, a health policy advisor to Presidents Clinton and Obama, said, “I view California as a model state that’s likely to be used as a best practices example for how Congress can move ahead in a new Democratic administration without in any way creating barriers to do more aggressive policies in the future.”

The expansion has yet to be signed into law. The state government has found $215 billion in the budget to pay for it, but lawmakers must still pass a series of bills in the coming days to put the plan in action.

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Medicare World Blog