Health care in California: How the state made almost everyone eligible for coverage

Close to 94% of Califiornians have health care insurance, an all-time high insured rate in 2022, according to an analysis by the California Health Care Foundation. That 6% uninsured rate is a steep improvement from a peak of around 15% in 2013, according to the analysis.

Those gains can be attributed to both federal and state efforts to expand health care coverage after Congress passed the Affordable Care Act, often called Obamacare,  in 2010. That boosted funding and expanded eligiblity for Medi-Cal, California's version of the federal low-income Medicaid program. Medi-Cal enrolls about 15 million people.

About 1.5 million people have insurance through Covered California, a state-supported program that offers health insurance to people who don’t qualify for it through work or Medi-Cal. The rest generally obtain coverage through their employers.

California has a record-high insured rate — but many states are doing even better.

In some ways, that’s unavoidable. Compared to other states, California has the highest proportion of immigrants with and without legal status in the United states, and has one of the highest proportions of Latinos. Those communities have historically faced barriers to access.

The state’s unemployment rate is higher than the national average too, meaning fewer residents can use employer-sponsored care and more have to turn to state-funded programs.

Conservative states such as Kentucky and Ohio have higher proportions of insured residents than California. They are among those that have expanded Medicaid in line with Affordable Care Act. One state, Wisconsin, has not adopted an expansion, but it offers tax credits for marketplace insurance to those who earn more than the poverty line, according to the Kaiser Family Foundation.

Over 2 million Californians will lack health insurance this year despite all the efforts to expand coverage, researchers at the UC Berkeley Labor Center estimate. One-fifth of them are projected to be undocumented residents. The others are people who qualify for coverage but have not signed up, cannot immediately afford it, or have chosen not to sign up.

In the past decade, residents without legal immigration status made up the largest group of uninsured Californians, according to the Public Policy Institute of California.

Half a million undocumented Californians are not eligible for Medi-Cal because they earn too much money to qualify for it, according to the labor center’s analysis.

Around 40,000 of them qualify for Medi-Cal because of their legal status through the Deferred Action for Childhood Arrivals program, according to new May regulations from the Biden administration. But those whose families arrived in the United States after the program’s 2007 cutoff remain ineligible under federal law for Covered California or its subsidies.

Money is often a key barrier to health insurance, particularly for low-income Californians without steady jobs or employer-based coverage. Health care costs are rising significantly faster than average incomes in California, according to a January 2024 report from the UC Berkeley Labor Center.

To help those who don’t qualify for low-income insurance, policymakers have bolstered the Covered California marketplace multiple times, through both federal subsidies and state funding. Plans are available for as little as $10 a month.

But premiums for California’s middle-class have been steadily rising in recent years, and overall health care costs Californians more per person than it costs the average American, according to the California Health Care Foundation.

California expanded access to health insurance in an era of generally increasing tax revenue. That’s changing, with the Newsom administration projecting tight budgets in the years ahead.

California’s state spending for Medi-Cal has risen to about $37 billion a year, an increase of over 80% since 2018. The expansions of access to undocumented households cost about $4 billion a year, according to the Legislative Analyst’s Office. California’s budget is nearly $300 billion this 2024-25 fiscal year.

Those numbers led lawmakers to scale down more ambitious health care proposals in 2024.

One would have created a way for higher-earning undocumented people to buy health insurance through Covered California. Colorado and Washington have experimented with those so-called mirror marketplaces. The California Legislature’s Democratic supermajority voted that down.

The Legislature also has backed away from single-payer health care, with projected costs to the state of government-funded health care exceeding $390 billion a year.

While lawmakers haven’t been able to muster support for a government-run system, they have shored up the state’s marketplace. Covered California receives funding from the state and its costs are capped by federal aid established at the onset of the COVID-19 pandemic. The COVID assistance is set to expire at the end of 2025.

With expansions off the table for now, state officials are attempting to hold down costs for health care consumers. The Office of Health Care Affordability, announced a new rule in April which aims to hold annual health care cost increases below 3%. Experts say it could take years for Californians to feel its effects.

Just over half of Californians reported that they skipped or put off care due to costs in the last year, according to an early 2024 poll from the California Health Care Foundation. Half of respondents said it led to their condition worsening. The numbers are even more stark for low-income, Black and Latino Californians.