California Budget Conference Committee Considers Coverage Expansion for Young Adults

June 5, 2017

While federal policymakers consider legislation that would eliminate coverage for 23 million Americans, California considers expanding Medi-Cal to all low-income California residents up to age 26


Late last week, the two-house budget conference committee of the California Legislature began deliberations on the 2017-2018 state budget. The conference committee will take up multiple budget items affecting health care and coverage.

One significant issue before the conference committee continues the state’s move toward coverage for all and extends Medi-Cal coverage to low-income young adults up to age 26. Both houses passed a version of the budget that includes the coverage expansion, but at different funding levels, making it an item the conference committee can and will consider.

The 2017-2018 budget proposal follows California’s 2016 expansion of Medi-Cal to cover all low-income children, regardless of immigration status. The number of uninsured children in the state dropped from 437,000 in 2014 to fewer than 100,000 in 2017, according to the California Children’s Health Coverage Coalition. The proposed Medi-Cal expansion for young adults mirrors provisions in the federal Affordable Care Act (ACA) that allow young adults to stay on their parents’ coverage until age 26.

The 2016 presidential election shifted the national political landscape and led to current efforts by the Republican President and Republican majorities in both houses to repeal the ACA.  In a striking contrast, last year California voters considered 17 ballot initiatives, including Proposition 56, which raises new revenues for state health care programs. Proposition 56 passed with overwhelming support and imposes a $2 per pack excise tax on cigarettes and similar taxes on other tobacco products.

Governor Brown’s 2017-18 budget proposes allocating $1.3 billion Proposition (Prop) 56 revenue for expenditure growth in existing Medi-Cal programs for base managed care capitation payments, base dental expenditures, high-cost drugs, drug treatment and specialty mental health programs – growth that would normally be funded by state general fund revenues.

Both the Senate and the Assembly budget subcommittees rejected the Governor’s proposal and instead propose that a portion of Prop 56 funds be dedicated for Medi-Cal coverage of an estimated 80,000 currently uninsured, low-income young adults, regardless of immigration status. If adopted, California would achieve near universal coverage for residents under age 26, a significant achievement considering the current political climate for health care at the federal level.

The budget passed by the Assembly included $54 million to cover low-income young adults in 2017-2018, continuing annually thereafter, based on the estimate provided by stakeholder proponents. The Senate approved $63.1 million in FY 2018-19, and $85 million annually thereafter, to provide full-scope Medi-Cal coverage for all individuals up to age 26 beginning July 1, 2018. The Senate developed an independent estimate with technical assistance from the Administration. The Administration estimated costs to reach $300 million.

The Budget conference committee, the legislative forum charged with reconciling differences in the Senate and Assembly budget plans, will consider this issue as part of the budget deliberations.

Other health coverage items before the budget conference committee include:

  • Prop 56: Although both the Senate and Assembly allocate Prop 56 funds to increase Medi-Cal provider payments for dentists, family planning providers, some physicians and specialists, each house allocated different funding levels and articulated different requirements for the funds. For example, the Senate proposes a high-need specialty access pool for physician and specialist rate increases consistent with the results of the Access Assessment study (required by the Medi-Cal 2020 waiver), network adequacy standards or to more closely align Medi-Cal rates with the Medicare program. The Assembly dedicates Prop 56 funds for a physician incentive payment program.
  • Medi-Cal Optional Benefits: Both houses restore Medi-Cal optional benefits eliminated during the recession including optician/optical laboratory, audiology, incontinence creams and washes, podiatry, speech therapy and full restoration of dental benefits. However, the Senate relies on Prop 56 funds for the restoration and the Assembly allocates state general funds for this purpose. In addition, the Assembly included general funds for restoration of chiropractic services while the Senate did not.
  • Medi-Cal for Seniors and Persons with Disabilities. The Assembly budget plan, but not the Senate, includes $30 million general fund to increase the income eligibility for the Medi-Cal Aged and Disabled Federal Poverty Level (FPL) program from 123 percent FPL to 138 percent FPL. With ACA implementation, income eligibility for no share-of-cost (SOC) Medi-Cal increased for most Medi-Cal programs up to 138 percent FPL. The Assembly proposal expands access to no SOC Medi-Cal for beneficiaries in the Aged and Disabled FPL program up to 138 percent FPL.

Newly Qualified Immigrants (NQIs). Through budget negotiations, Senate, Assembly and the Administration agreed to include placeholder trailer bill language eliminating the statutory authority for the Newly Qualified Immigrant (NQI) Affordability and Benefit Program. NQIs are legal permanent residents, legally in the U.S. for less than 5 years, and therefore ineligible for federal Medicaid. In 2013, California passed legislation to transition NQIs over age 21 without children into Covered California. As envisioned, the “wrap” program would cover premium costs (minus the advance premium tax credit) as well as any cost-sharing charges for NQIs enrolled in Covered California. NQIs are currently eligible for full-scope, state-only funded Medi-Cal. The budget language authorizes the Department of Health Care Services (DHCS) to seek federal designation as minimum essential coverage (MEC) for the existing, state-funded Medi-Cal program for NQIs. Full-scope Medi-Cal meets the MEC requirements; and therefore, NQI Medi-Cal coverage should be eligible for federal MEC designation. DHCS has never applied to the federal government for an MEC designation for this coverage program.

The ACA individual mandate requires most tax filers to have MEC or face a tax penalty. Securing MEC designation for the Medi-Cal program for NQIs protects NQIs from this penalty.

The conference committee will meet in the coming days to develop a final compromise budget prior to the June 15 Constitutional deadline for the state to pass a budget.