California Healthcare Coverage: An Overview

As of December 2019, healthcare laws in California are somewhat in flux given the uncertain fate of the federal Affordable Care Act. Under that federal law, California set up the California Care health insurance exchange that enabled eligible individuals and small businesses to purchase private health insurance coverage at federally subsidized rates.

However, the subsequent administration did not support the federal Affordable Care Act and removed some elements of it and expressed its intent to completely eliminate it. That left California’s health insurance laws in limbo.

Congress overhauled the nation’s healthcare system in 2010 when it enacted the Patient Protection and Affordable Care Act (ACA). This was signed into law by President Barack Obama.

The ACA’s intent was to provide affordable healthcare to more Americans. It did this by expanding the list of those eligible for Medicaid eligibility (called Medi-Cal in California) as well as changes in individual insurance markets that required insurers to accept all applicants and charge the same rates regardless of preexisting conditions. The ACA also made it a legal requirement that every individual buy health coverage or pay a fine, termed the “individual mandate.”

Under the ACA, every state had the option to expand its Medicaid eligibility program and set up a health insurance marketplace. California became the first state to do this, creating the California Health Benefit Exchange. The name of the program was changed to Covered California two years later. Enrollment began in 2013.

Individuals, families and small businesses can buy insurance sold by private insurers through Covered California at a lower price thanks to subsidies from the federal government. The program also helps individuals and families who qualify for Medi-Cal (aka Medicaid).

Covered California, through the ACA, greatly expanded eligibility for Medi-Cal. It also provides subsidies from the federal government toward the purchase of a private insurance plan.

Many different types of healthcare coverage are offered and available in California. Each one has its own set of rules. Californians can purchase various types of private insurance or public programs like Medi-Cal, California’s version of Medicaid.

Insurance plans in California include:

• General health insurance ‒ Insurance that pays for part or all of a person’s medical care, including in-hospital care, as spelled out in the insurance policy.
• Preferred Provider Organizations (PPOs) ‒ Managed care plans that have a network of preferred providers. An insured person pays less if she goes to those providers and sometimes pays nothing at all.
• Exclusive Provider Organization (EPOs) ‒ Plans that require an insured to use the doctors or hospitals in the EPO’s network. If the insured goes outside the network, the EPO does not cover any part of the costs.
• Health Maintenance Organizations (HMOs) ‒ An insured is assigned a primary care doctor in the HMO network who provides that insured’s basic care and also makes referrals to specialists.
• Medi-Cal ‒ Free health insurance for low income individuals who qualify, largely provided through managed care organizations.
• Medicare ‒ Available under the federal program to retired persons and disabled persons if they have paid into the program for the required amount of time.

Even at the time it was enacted, the ACA was controversial. The subsequent administration opposed the plan and attempted unsuccessfully to repeal it. However, the efforts continued in different ways including legal challenges and attempts to “gut” the ACA. In 2017, Congress passed the Tax Cuts and Jobs Act, eliminating the fine for violating the individual mandate, which began in 2019.

Other legal challenges have been raised as to the constitutionality of the ACA. This has caused instability in the markets that is likely to continue in the foreseeable future.