When Governor Gavin Newsom took office four years ago, the Democrat went after Republicans on the national stage as they attempted to pass the Affordable Care Act. Key to his ambitious health care agenda: reinstating the penalty for Californians who lack health insurance, which had been abolished at the federal level.

It was a hard sell for a new governor, and Newsom needed strong allies among Democratic state leaders, who at the time, in 2019, expressed concern about essentially imposing a new tax on Californians who couldn’t afford rising health care costs . Democrats, who then, as now, controlled the state legislature, eventually backed Newsom in exchange for a promise: The state would impose the fine, but use that money to provide financial aid to offset out-of-pocket costs for Californians who take out health insurance. the state fair covered California.

Newsom, now in his second term, has since retracted that promise. His administration is holding onto revenue raised from the so-called individual mandate, the requirement that people have health insurance or pay a fine. And his proposed budget for the upcoming fiscal year beginning July 1, which is being debated in the

stands

Legislator, funnel the money into the state’s general fund.

That infuriates fellow Democrats who accuse him of breaking a promise and ignoring the millions of Californians who can’t afford their deductibles and copays.

California began imposing fines on the uninsured in 2020, raising an estimated $1.1 billion in its first three years. to the Ministry of Finance. Democratic leaders said Newsom’s tactic of withholding the money for the general fund is a rip-off.

Money from the mandate should stay in health care, Senate President Pro Tem Toni Atkins told KFF Health News, arguing that the state should now distribute money to help people pay for health insurance. I don’t know what we were waiting for. We need to find a way to make health care more accessible, and there’s no question that the cost of health insurance is a barrier.

Democratic lawmakers are expected to continue ramping up pressure on Newsom in hopes of reaching a deal by the June 15 deadline to pass a budget bill. We’ve always felt that the money is for driving down insurance costs, he said

Democratic

Assemblyman Phil Ting

(D-San Francisco),

Chairman of the Committee on Budgets.

Newsom came out stunned for the individual mandate in 2019 amid concerns about rising insurance premiums, pledging to lower the cost of covered health care for consumers in California while differentiating from then-President Trump, who described the insurance mandate as unfair attacked. Congressional Republicans had scrapped the federal penalty portion of the Affordable Care Act in 2017. Newsom argued that it would still work in California to reduce health care costs and help him achieve his goal of universal health care, the centerpiece of his ambitious health care agenda.

Newsom now argues that federal health insurance subsidies that offset the cost of monthly premiums are sufficient. And despite an expected budget deficit of $32 billion, Newsom says California can’t afford to spend the money to further reduce out-of-pocket costs. He argues that it would be untenable to spend the money to lower the deductible, for example. His proposed budget would instead keep the money for the state’s general fund, to be used for whatever California wants to spend it on.

But health care advocates who lobbied for the fine, as well as many Democratic lawmakers, say the money could be a lifesaver and should be distributed now.

The individual mandate was not intended to create funds for other government programs outside of health care, he said

Democratic

Assemblyman Jim Wood

from Santa Rose

(D-Healdsburg), chairman of the Assembly Health Committee, during a heated budget hearing this spring. The clear intention of the legislature was that this money was intended to go to affordability.

Wood said he might have rejected Newsom’s plan had he known that the revenue it generated would go directly into the general fund. I don’t think I would have supported it, he said. It just feels like a violation of what we thought we were doing.

Rising out-of-pocket healthcare costs, including for insurance premiums and deductibles, are leading people to forego healthcare. In California, a whopping 52% of residents report skipping or delaying treatment in the past year for financial reasons, according to a recent survey by the nonprofit California Health Care Foundation.

Diana Douglas, a lobbyist at Health Access California who was part of the coalition that supported the state’s coverage mandate in 2019, said Newsom should recognize rising costs and spend the money on affordability aid now. This fine money should be used to help Californians pay for coverage and care.

Health insurance policies offered by Covered California are getting more and more expensive. For example, the deductible for a mid-sized insurance plan will rise to $5,400 next year, according to Covered California, up from $4,750 this year and $3,700 two years ago.

And even many Californians who purchase coverage delay treatment because of the high cost. A 2022 Covered California survey found that 48% of consumers postponed important medical care because of cost.

Newsom evaded a question from KFF Health News this spring about the criticism he faces for trying to keep the mandate money. California. His administration defended the push to funnel money into the general fund, saying that the revenue would be paid back to a special health fund and eventually available for health care if the federal government reduced existing premium subsidies. Administration officials claim that Newsom essentially borrows the money and says it will be paid back later, though lawmakers have expressed concern that he will never keep that promise.

Critics and some Democratic lawmakers say the withholding of the money is a double whammy for low- and middle-income residents struggling to pay for coverage, claiming it amounts to a tax on the poor. It feels like we were trying to bail it out on the backs of our low-income communities, said Democratic State Senator Caroline Menjivar, who represents

the States

San Fernando Valley.

Most of those paying the fine are low- and middle-income Californians who earn at or below 400% of the federal poverty line, which is $58,320 for an individual and $120,000 for a family of four, according to the latest available data from the state Franchise Tax Office.

Democratic lawmakers this year support an alternative proposal, championed by Health Access California, to spend revenue from fining uninsured residents on increasing health insurance subsidies for low- and middle-income earners. They would honor a deal that advocates struck with state Democratic lawmakers last year to reduce or eliminate out-of-pocket costs in Covered California and eliminate deductibles entirely for a mid-tier plan.

We need to make sure that people not only have health insurance, but that they can afford to actually use it, said Ronald Coleman Baeza, a health care lobbyist with the California Pan-Ethnic Health Network.

While Newsom and his Democratic allies have made major coverage expansions, the state lacks universal health care. Experts say more than 2.5 million Californians remain uninsured, including unauthorized immigrants who earn too much to qualify for Medi-Cal, and lawmakers are increasingly annoyed that not all insured residents can afford to use their coverage .

There was a clear commitment that these dollars would be used to drive down health care costs, and we failed to do that, said Councilman Pilar Schiavo, a Democrat representing the Santa Clarita Valley, who introduced a bill that would eliminate all revenue from the individual mandates remain reserved for healthcare. Although it died this year, it could be revived next year, and proponents say they will continue to push Newsom to distribute the existing money to Covered California consumers.

We must keep our promises, Schiavo said. If you have insurance that you can’t afford, or if you’re afraid to go to the doctor because of the high bill, you don’t really have access or universal coverage.

This article was produced by

KFF Health News

formerly known as Kaiser Health News, a national newsroom producing in-depth journalism on health issues.