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California’s Individual Mandate: A Fix For A Broken System? Or A Penalty On The Poor?

March 11, 2019 4:11 p.m.

GUEST:Sammy Caiola, health reporter, Capital Public Radio

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Related Story: California’s Individual Mandate: A Fix For A Broken System? Or A Penalty On The Poor?

Transcript:

This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

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Mintz built on excellence driven by change California wants to require people to have insurance and couldn't find people who don't. Cap radio's Sami Cale explores whether it's a fix for a broken system or just a penalty on the poor.

Kate green opens her garage door and a blue eyed husky comes bounding out toward me. This must be no. Walking the dog is on a short list of chores that Green keeps up in order to live rent free at her brother's house in Sacramento. The 30 year old is putting almost all of her income toward student loans and her credit card debt and none of it toward health insurance. It's a risk she's willing to take.

If I have a life threatening injury and I get taken to the hospital by ambulance like yes right now I would have hundreds of thousands of bills and if I was insured it might be like tens of thousands is bankrupting me effectively either way at this point in my life.

Green says her employer sponsored coverage was 240 dollars a month so she dropped it. Last October she skirted the federal fine last year and this year she's off the hook. Americans no longer have to pay that penalty because of new Trump administration rules. Gov. Gavin Newsom says revenue from a California mandate could pay for more subsidies and Covered California the state's health insurance marketplace. Democratic Senator Richard Pan authored one of two new INDIVIDUAL MANDATE BILLS.

Really. Health insurance is about everyone being in right. More people who are in the more stable the market is and the lower that premiums are.

Experts predict hundreds of thousands of people will leave the market if the state doesn't create a penalty Covered California is already seeing a drop in new sign ups. But as more Californians enroll in insurance fewer people will pay the penalty which means less revenue for subsidies. It's a Catch 22. It's all a little bit puzzling. That's Lanhee Chen with the Hoover Institution a public policy think tank at Stanford University.

A mandate is not in and of itself a workable way to enhance affordability or frankly to compel coverage for those who don't want it.

He says that some people will just choose to pay the penalty. And an analysis by one of our partner reporters with the USC Center for Health Journalism collaborative shows it would disproportionately affect people in lower and middle income tax brackets the state's poorest are exempt from the fine Kate Green says if a state requirement became a reality she'd have a tough decision to make.

You know weigh the options is one better than the other. Kinda depends on how much the penalty is.

She says it's unfair to force people who are already struggling to buy costly plans that don't always work. She told me about a time when she was insured but she still got slapped with huge bills after a minor knee injury.

If health insurance was something that was valuable enough as in if you paid for it and then you didn't have to pay it when you went to the doctor and it was effective then absolutely I would have it.

So make a better system and then you wouldn't have to penalize people in the first place.

But mandate supporters say they are making a better system both by drawing healthier people into the market and using funds from the penalty to make coverage cheaper. As Kate walks nowhere around her grassy suburban neighborhood she wears a knee brace to prevent another injury. It's one of the tricks that she's picked up from being uninsured over the years.

I had a lot of intimacy and a lot of water and some whiskey and that was the cure.

You know kind of what you do as well.

I'm going to drink to the water and hope that everything is okay.

And he proposed insurance requirement in California wouldn't kick in until 2020.

Joining me is cap radio's Sammy payola and Sammy welcome. Thank you. Can you give us more on how a proposed individual mandate would work in California. Would penalties for not having insurance be assessed at tax time. Would they be the same kind of penalties regardless of income level.

SHAW So we don't have all too much detail because the legislation supporting the individual mandate is recently introduced. But our understanding is it would be pretty similar to the federal penalty that disappeared this year. So it would be assessed at tax time and people at the lowest income levels would be exempt but essentially anyone else could be fined for not carrying insurance.

You say because the federal mandate is no longer in force enrollments in Covered California have gone down. How much have they gone down.

So we saw between this year and last year a 23 percent drop in new enrollments and Covered California really attributed that to the loss of the federal penalty. You know they said since people are required or they're not charged for not carrying insurance that they're just sort of saying well I'll just go without it then.

And do we know if that's among mostly relatively young healthy people like the person featured in in your report.

KATE Green I don't know for sure who dropped out of Covered California. I have to go back and double check that but I think it's safe to assume that the people who are most likely to not carry insurance are those who feel that they don't use their insurance because they are younger and healthier and you know they just don't see the point in paying monthly high premiums high out-of-pocket costs when they they just don't see the need to carry it. So Kate Green is a good example of that. She says she doesn't have any major health problems she almost never goes to the doctor and it's just money that she doesn't want to spend on health insurance.

She'd rather save it for her student loans or her car payments or you know travel other other things that are more important to her than having that kind of backup plan for health care.

And so as the rules stand right now if Kate didn't think she could afford to pay that two hundred and forty dollars a month for her employer's insurance does she have the option to apply for medical health insurance so that would entirely depend on her income bracket.

So I am not sure if she meets the criteria for Medicare eligibility. If she made too much then she wouldn't. And so her options would be her employer insurance or the Covered California individual state marketplace which she told me she had been on before and she wasn't able to really get the care she wanted. She wasn't happy with the provider network and then you know she would still she got a small injury and still had to pay a huge bill and so she decided to Covered California wasn't for her either. And not just health care was too expensive.

So she was going to go without it.

It seems from your report that the penalties for not having insurance would have to be pretty high to make paying for insurance feasible for people like Kate.

Kate told me that it sort of depends how much the penalty would be as to whether she would choose to get insurance or not. So we're talking theoretically about a California penalty. And she said if it was just you know 300 dollars or something like that that she would probably just pay the penalty. But if it were something much higher at that she would maybe consider getting insurance if it made more sense because she didn't want have to pay a huge fine. We know that in 2016 the federal penalty averaged out to be about six hundred ninety five dollars per adult or 2.5 percent of a yearly household income depending on which was higher.

So you know I think a lot of people who don't feel they need insurance they would they would balance depending on how much a penalty would be if it was worth just signing up to not have to pay that penalty.

What would be the downside to high penalties like that would it be that it targets people were struggling in the first place.

So yeah there is some concern that a penalty would disproportionately affect lower and middle income people. That's actually what we saw under the federal penalty and we did some analysis of the IRS data and we did find that nearly three of four Californians who paid the federal penalty in 2016 earned less than fifty thousand dollars in gross income. So it did look like it. It really did take a harder hit on low and middle income people.

I'm wondering where this state health insurance mandate this proposal fits in with the idea of California having its own single payer form of health care where it wasn't the legislature talking about that last year.

So yeah. Over the last year or two there was a lot of conversation about a single payer system and there was a whole assembly committee to assess that. And it basically is a very long and complicated process that requires federal approval and really would take a huge lift on California's part and a lot of money. And Governor Gavin Newsom campaigned on single payer and has said that he ultimately does want that to happen in California and in his first days in office he sent a letter to the Trump administration sort of asking for new sorts of waivers that would allow California to innovate in that way.

He says that's his long term goal. But in the meantime since that is not feasible in the immediate future he wants to take a more piecemeal approach sort of a step by step with the goal of getting all Californians insured. So that's a system we call universal health care. So it's not like single payer where there's only one sort of government provider for everyone. It's still are our current system with a patchwork of programs but it's making sure that everybody in the state can afford and have access to some version of health insurance.

And that's what Governor Newsom is really trying to get to with this individual mandate is this insurance individual mandate proposal has been gaining a lot of traction among lawmakers so there are two different bills one in the Assembly and one in the Senate that are pushing for an individual mandate. Hard to say what chances it has I think it would be a pretty big lift and it's not clear right now what it will take to pass it. So depending on whether or not it's a tax it could require a two thirds vote instead of just a simple majority which would be more difficult.

But you know the lawmakers aren't really confirming right now whether it's going to require that two thirds cap radio Sammy payola did this story as part of USC Center for Health Journalism collaborative with reporters Sophia bootleg and Mike Finch. Sammy thank you. Thank you so much for having me.

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