Governor Signs SB 10 — Legislation Aimed at Allowing Undocumented Californians to Buy Coverage in the State Exchange

June 14, 2016

Governor Jerry Brown signed SB 10 (Lara) which requires Covered California to seek federal approval allowing undocumented Californians to buy health coverage through the exchange. The Affordable Care Act (ACA) prohibits undocumented persons from buying coverage or receiving subsidies through state exchanges, but does not prohibit them from buying unsubsidized coverage in the private individual market.

Under Section 1332 of the ACA, states may apply to the Centers for Medicare and Medicaid Services (CMS) for Innovation Waivers in four areas: (1) the individual mandate, (2) the employer mandate, (3) health benefit exchanges and essential health benefits, and (4) premium and cost sharing subsidies. The ACA also requires Section 1332 waiver proposals to be comparable or exceed the basic ACA framework in terms of number of people covered, the scope of health benefits, and consumer affordability, and to not increase federal costs. Section 1332 requires states to pass enabling legislation before seeking a waiver.

SB 10 reflects extensive stakeholder engagement by Covered California and the Department of Health Care Services. State policymakers hope that the waiver, if approved by CMS, will simplify the process of mixed-status families seeking coverage for all family members — citizen and legal resident family members as well as undocumented family members — and encourage those who remain uninsured to buy coverage.

While the state’s waiver request would allow undocumented persons to buy Covered California coverage, they will continue to be ineligible for federal premium and cost-sharing assistance. Coverage without subsidies may remain out of reach for many undocumented immigrants because of premium costs. Preliminary estimates provided to Covered California suggest that of the more than 300,000 individuals who could be eligible to buy coverage under the waiver, approximately 50,000 are likely to actually enroll in Covered California.

The state application for a waiver also has strong symbolic value, signifying the state’s commitment to ensuring all Californians have access to health care coverage. Passage of SB 10 follows the May implementation of Medi-Cal coverage for undocumented children.

In anticipation of the bill’s passage, Covered California released a request-for-proposal for an external consultant to help with the waiver application. Covered California is in the process of selecting a contractor.

Additional Reading: Opportunities for California Under Section 1332 of the Affordable Care Act (ITUP)