Chiu Legislation to Increase Health Care Affordability Passes Assembly

For immediate release:

Bill will cap premiums for low- to moderate-income Covered California customers

SACRAMENTO--Legislation authored by Assemblymember David Chiu (D-San Francisco) to increase health care affordability for low- to moderate-income Covered California consumers passed the Assembly late yesterday. Assembly Bill 2565 would cap Covered California insurance premiums to 8 percent of income for customers making earning between 138 percent and 400 percent of the federal poverty level (FPL).  

“It is not enough to simply make health care available. We also must make it affordable,” said Assemblymember Chiu. “This effort to cap premium payments will ensure low- to moderate-income Californians have enough assistance to afford coverage and can remain insured.”

While California has made significant strides in cutting its uninsured rate under the Affordable Care Act, affordability of health care remains a daunting challenge. Covered California consumers in the 138 percent to 400 percent FPL income range are already eligible for federal health care premium subsidies, but the high cost of living in California makes premium payments unmanageable for many consumers in the state.  

Low- to moderate-income Covered California customers are paying approximately 10 percent of their monthly incomes on premium costs. When out-of-pocket expenses are factored in, some consumers can end up spending between 20 and 30 percent of their monthly incomes on health care costs.

The types of subsidies that would be available under AB 2565, which would be available in addition to the existing federal subsidies, have proven to be an important factor in increasing enrollment and retaining coverage. A 2015 survey showed that the availability of subsidies was a stronger motivator for consumers to purchase healthcare than the threat of potential penalties under the ACA’s individual mandate.

Increasing enrollment among a broader population of consumers, especially among younger consumers, is vital to ensuring a more balanced risk mix in the marketplace which ultimately leads to lower overall costs. The Assembly has prioritized funding for AB 2565 in its budget proposal. Health Access is sponsoring AB 2565 along with several other measures to improve healthcare affordability for Californians across a spectrum of income levels.  

“In our high cost-of-living state, many Californians need more help affording health care. While the Affordable Care Act provides significant subsidies to some, California should fill the gaps and correct the cliffs in affordability assistance,” said Anthony Wright, the Executive Director of Health Access California. “The more people can sign up for and afford coverage, the bigger and broader the insurance pool, and the better we can share the risk and cost of coverage and care. Our health system is stronger when everyone is included.”

AB 2565 now heads to the Senate.