Gavin Newsom's first actions as governor target health care

SACRAMENTO, Calif. -- Gov. Gavin Newsom's first act as governor Monday was to propose state-funded health coverage for 138,000 young people in the country illegally and a reinstatement of a mandate that everyone buy insurance or face fines.

Newsom also proposed giving subsidies to middle-class families that make too much to qualify them under former President Barack Obama's health care law. He signed an order giving the state more bargaining power in negotiating prescription drug prices and sent a letter to President Donald Trump and congressional leaders seeking more authority over federal health care dollars.

Newsom was elected following a campaign that leaned heavily on his promise to provide health coverage to everyone. His actions hours after he took the oath of office take a step in that direction but the $760 million price tag will require approval from the Democratically controlled Legislature.

His proposals were a preview of his budget to be released later this week. They mirror ideas pushed last year by Democrats in the Assembly, who were unable to convince former Gov. Jerry Brown to embrace them.

California has a projected surplus of $15 billion.

Obama's health law required everyone in the country to buy insurance or pay a penalty, a controversial policy meant to ensure that the insurance pool has a mix of healthy and sick people. The penalty was zeroed out in 2017 by the Republican Congress and President Donald Trump. Insurance companies, concerned that only people with expensive health problems would buy coverage, responded by raising premiums for people who buy their own coverage without going through an employer.

California would join Massachusetts, New Jersey and Vermont as states with their own insurance mandates.

Obama's health law also created subsidies to help people buy coverage if they don't get it from an employer or a government program such as Medicare or Medicaid. The subsidies cover a large share of the cost for people with modest incomes but phase out as incomes rise, topping out at about $48,000 per year for an individual and $100,000 for a family of four.

With high monthly premiums and large deductibles before insurance kicks in for many services, those plans can be too expensive for many, especially those who lack a federal subsidy. Newsom would use $500 million in state money to make the subsidies larger for 1.1 million families that already get them and provide new assistance to about 250,000 people who make too much.

Newsom's plan would provide financial assistance for individuals who make up to about $73,000 a year and families of four making up to $150,000.

California's uninsured rate has dropped from 16 percent in 2013 to just over 7 percent four years later. Many of those who still lack coverage are ineligible for publicly funded programs, such as Medi-Cal and private insurance subsidies, because they're living in the country illegally.

Medi-Cal, the state's version of Medicaid, is jointly funded by the state and federal government and provides coverage to one in three Californians.

California uses state money to extend Medi-Cal coverage to people living in the country illegally up to age 19. Newsom proposes pushing back the cutoff to age 26, covering an additional 138,000 people at a cost of about $260 million a year, according to Newsom's spokesman, Nathan Click.

Newsom signed an executive order directing state agencies to move toward purchasing drugs in bulk for all of the 13 million people on Medi-Cal. Purchasing for all but 2 million people is currently handled by the private insurers that serve as managed care organizations. Newsom hopes bulk purchasing drugs will give the state enormous bargaining power to negotiate lower prices.

His order directs state agencies to explore letting others, including employers and private insurers - join the state's purchasing pool.