California poised to remove all immigration status rules for Medi-Cal healthcare

California would allow all income-eligible residents to qualify for the state’s healthcare program for low-income people regardless of immigration status under Gov. Gavin Newsom’s budget proposal unveiled Monday.

Newsom’s plan calls for the state to spend $2.2 billion a year to close the final gap in Medi-Cal eligibility after years of incremental progress toward offering coverage to people living in the country illegally by first allowing children and seniors to qualify.

If approved by the Legislature and included in the final budget signed by Newsom in June, California would further chip away at barriers to accessing safety net programs for people living here illegally. The proposal would go into effect after Jan. 1, 2024.

“California is poised to be — if this proposal is supported — the first state in the country to achieve universal access to health coverage,” Newsom said during his budget news conference.

Efforts to eliminate the legal-status requirement have been a priority for Democratic lawmakers for years, but Newsom’s proposal will be set this year against a far more ambitious plan being weighed in the Legislature that guarantees Californians healthcare regardless of income. A group of Democratic lawmakers unveiled their proposal last week to create a single-payer healthcare system, in which medical expenses for residents are covered by a government-run fund, which would be paid for by creating new taxes on individuals and businesses.

That single-payer proposal is laid out in two separate pieces of legislation — one detailing how the state-run healthcare system would work and another that outlines how it would be financed. On Tuesday, the policy proposal is set to be considered in the Assembly Health Committee, and the panel’s chairman, Assemblyman Jim Wood (D-Santa Rosa), said he plans to vote in favor of the plan.

Newsom, who campaigned for office four years ago championing single-payer healthcare, said he remains committed to the goal but had not yet reviewed the financing structure currently proposed in the Legislature in order to weigh in. Newsom, who is facing reelection in the fall, said the state’s Healthy California for All Commission is set to release in the next two months its report detailing a plan on how best to create a single-payer model in the state.

“As you know, I’ve long believed it’s inevitable in this nation,” Newsom said, who added that “the ideal system is a single-payer system.”

California’s Medi-Cal system, which covers roughly a third of the state’s residents, first extended eligibility to children living in the country illegally through the age of 18 in 2016. That was expanded in 2020 to young adults so that the age cutoff mirrored that of the Affordable Care Act, which allows a person to remain on a parent’s health insurance plan until age 26. At the time, Newsom called the expanded eligibility the “right thing to do.”

Last year, the state added low-income Californians 50 and older regardless of immigration status, which is set to become effective on May 1. That change is expected to cost $567 million during the upcoming fiscal year that begins July 1.

Newsom’s proposal to eliminate eligibility by age and extend coverage to an estimated 700,000 people who otherwise meet income requirements will cost $613.5 million in state funds during the current fiscal year and $2.2 billion each year after when fully implemented in 2024. The state’s overall Medi-Cal budget is $132.7 billion. The program will cover approximately 14 million Californians during the 2022-23 fiscal year.

“For those of us who have worked on this campaign a long time, this has been a long time coming, but it’s still incredible,” said Sarah Dar, the director of health and public benefits policy at the California Immigrant Policy Center. “The coronavirus has brought clarity to the fact that if only some of us have access to healthcare, that doesn’t work. We are all healthier when we all have access to healthcare.”

There has been growing support to extend coverage to residents without legal status. A Public Policy Institute of California poll last year found that 66% of Californians support offering healthcare coverage to immigrants who are in the country illegally. That was up from 54% in 2015, the last time the institute asked the question in its polling.

Currently, undocumented immigrants who meet the income threshold — making less than $36,156 a year for a family of four — qualify for scaled-back Medi-Cal coverage, which covers only emergency room and pregnancy-related care. Under Newsom’s plan, those without legal status who are income-eligible would instead qualify for full-scope coverage.

State Sen. María Elena Durazo (D-Los Angeles), who has pushed Newsom to eliminate immigration status as a barrier to Medi-Cal coverage, said the proposal will ensure those who are 26 to 49 years old who qualify for Medi-Cal are able to receive care.

“This is the working age and this group has the lowest percentage of employer provided healthcare in their workplaces,” Durazo said. “They don’t get it from their employer, they are working and they aren’t getting it through Medi-Cal, so it has put them in an impossible situation.”