Newsom promised big on California health care. Where do his bold plans stand now?
Early in his term, Gov. Gavin Newsom positioned himself as the governor who would champion health care. He vowed to target rising prescription drug costs and find a way for the state to pay for care for all Californians, a key campaign promise. He also set a goal of creating a blueprint to better serve the Golden State’s growing population of seniors.
But two and a half years after taking office and still struggling to control a pandemic, the governor has had to focus much of his attention on COVID-19, so timelines for other health efforts have been pushed back.
Two of Newsom’s boldest health care promises — affordable medications and universal, state-funded health care — have made little progress during his term. And a third — a master plan for seniors — has been drafted yet actions will be phased in over the next 10 years. So enacting each of them in some form will likely come after Newsom’s term ends — even if he isn’t recalled in September.
Health advocates and experts praise the efforts, but some are less convinced that Newsom can deliver on mammoth goals like creating a state-funded, single-payer health system.
“It’s important not to lose sight of some historic steps taken in expanding coverage,” said Thad Kousser, a political science professor at UC San Diego. “But to be clear he campaigned on a single-payer pledge that a lot of people didn’t think was realistic, and I think the last few years have shown us that it will be incredibly hard to achieve.”
Even before the pandemic, the governor acknowledged that full-fledged plans for reforming health care would take years.
His team says the work is ongoing, pointing to the billions of dollars in this year’s budget to expand health coverage and services. “Governor Newsom is working in partnership with the Legislature to make health care more affordable and accessible for all Californians — regardless of their age, immigration status, or income,” a spokesperson for the governor’s office told CalMatters in an email.
“I’ve only seen prices go up”
Newsom has often claimed California is leading the fight against prescription drug prices.
But drug prices are still rising. Last year, drug manufacturers reported price increases of more than 16% on more than 1,200 prescription drugs to state regulators.
Noelle Tuominen and her husband, Richard Pollari, of Livermore know personally about the high cost of medications because they have two children with Type 1 diabetes — their second-born was just diagnosed a few weeks ago.
The list price for ther daughter Eleanor’s insulin, Eli Lilly & Co.’s Humalog, is $274.70 per vial. Some Type 1 diabetics can go through two or three vials per month — although younger patients may need less. What a person ends up paying depends on their insurance.
Tuominen is grateful her family has good health insurance so last year they paid just $600 in co-pays for their daughter’s insulin. But in total, they spent about $17,000 on health care costs last year.
Her daughter, now 4, was diagnosed when she was 1. “It was a shock. We went to the ICU and ended up with a hefty hospital bill,” Tuominen said.
Now money that could be going to her kids’ college fund is going to an insulin fund — a backup plan in case her family is ever without health insurance. She said the pandemic taught her family that job security and the insurance that comes with it is never a guarantee.
“It’s very easy to say we’re going to tackle it, but harder to see action behind it,” Tuominen said of the promises around reducing health care costs. “Every day someone is getting diagnosed and every day someone has a new bill they need to cover to keep their child alive.”
Annemarie Gibson in San Diego has two sons, 11 and 13, also on the drug Humalog. She pays about $200 a month for their insulin, although she has to first pay a $2,900 per-person deductible before coverage kicks in.
“We started in 2011… and since then I haven’t seen any improvement. I’ve only seen prices go up,” Gibson said. She worries that when her sons age out of their parents’ insurance, they could have a hard time affording their insulin.
“You hear a lot about young adults who are on their own for the first time, they can’t afford their prescription and unsuccessfully ration their insulin,” she said.
About three in 10 adults reported not taking their medications as prescribed at some point in the past year because of the cost, according to a recent Kaiser Family Foundation survey.
But going after pharmaceutical companies during a pandemic could prove to be risky. “This is probably not the right political moment to be bashing drug companies…when vaccines have been so central to the state’s recovery to Covid,” Kousser at UC San Diego said.
“We started in 2011… and since then I haven’t seen any improvement. I’ve only seen prices go up.”
— Annemarie Gibson, san diego parent
Last year, Newsom signed a bill by Sen. Richard Pan, a Sacramento Democrat, that allows the state to take the first steps in creating state-run generics. The state would partner with manufacturers to make or distribute less expensive generic drugs, including one form of insulin, that would be widely available.
“It’s quite feasible. California is big enough that it can do this. But it’s still going to be hard,” said Geoffrey Joyce, director of health policy at the University of Southern California Schaeffer Center.
It will likely be several years before California makes any of its own generic drugs because many steps must be taken first, such as researching manufacturers and approving funding. An initial report on which drugs the state could target first is due next summer.
“We’ve started some important efforts; they haven’t necessarily yielded their full fruit yet,” said Anthony Wright, executive director of Health Access, a Sacramento-based consumer advocacy group that supported Pan’s bill.
The savings that could be passed on to consumers would likely be modest because the generics industry is already fiercely competitive, Joyce said. In the U.S., “nine out of 10 prescriptions filled are generics, but generics only make about 22% of overall drug spending,” he said.
In the meantime, “one thing the state can do is educate people on where to get the cheapest drugs, or say ‘we’ll pay your Costco membership fee to get the best prices until generics in California are up and running,’” he said. One recent USC study found that the federal government in 2018 overpaid by about $2.6 billion for generic drugs compared to what Costco members paid.
Rather than trying to lower drug prices, other states have limited what people pay out of pocket. In 2019, Colorado became the first state to cap insulin copays at $100 a month. Fifteen other states have followed suit with some type of co-pay cap on insulin. In California, two current bills aim to prohibit health plans from imposing a deductible on certain prescription drugs — one bill addresses insulin specifically and a second bill targets prescription drugs for some chronic diseases.
Newsom also issued an executive order on his first day in office directing the state to transition all Medi-Cal pharmacy services from a managed care system, in which the state pays health plans an annual fee for each person covered, to fee-for-service, where the state pays for each service provided. That move was expected to result in $612 million in savings for the state in fiscal year 2021-22.
But that transition, first slated for January of this year, has been delayed.
Where are we on universal health care?
Newsom’s boldest and most controversial promise was to push for government-funded health care for all Californians.
In 2019, Newsom established a Healthy California for All Commission, tasked with figuring out how to get the state closer to universal coverage, including the possibility of a single-payer system. In a single payer system, the government pays for all or most health costs, like in Taiwan and Canada.
Because of the pandemic, the commission postponed several of its meetings last year, pushing back its original timetable. It started meeting again more regularly this year.
Experts say California can get closer to covering everyone by continuing to remove eligibility and affordability barriers. In the most recent budget, for example, Newsom approved opening full-scope Medi-Cal to undocumented Californians 50 and older and agreed to remove what is known as the Medi-Cal asset test, which often forced seniors and people with disabilities to spend down their savings to qualify for free or low-cost coverage. Those two moves alone would allow approximately 250,000 more Californians to get covered.
But some of Newsom’s strongest supporters are holding him to the more ambitious goal of creating one state-funded health plan for everyone.
“We now have a willing federal partner, we have AB 1400, we have this commission, we can act now,” said Stephanie Roberson, government relations director for the California Nurses Association, one of the biggest proponents of single-payer health care.
Assemblymember Ash Kalra, a Democrat from San Jose, pulled AB 1400 or CalCare, which would create the framework for state-paid health care, from consideration earlier this year to iron out financing details.
The bill will be back next year. But the overarching question of how to pay for it has yet to be answered. A single-payer bill that was killed in 2017 carried a $400 billion price tag.
The commission is also exploring other options to pay for the program, including new taxes.
“He campaigned on a single-payer pledge that a lot of people didn’t think was realistic, and I think the last few years have shown us that it will be incredibly hard to achieve.”
— Thad Kousser, Political science professor at UC San Diego
Although some members have expressed concern about the political pushback that comes with new taxes.
“Sometimes in these groups everyone says, ‘oh yeah, no problem it should be easy to get Democrats or progressives to vote for taxes,’ but this is also the land of Prop. 13. If you want to stay an elected official, you’ve got to think carefully about imposing taxes on people,” Pan, who serves on the commission, said at a recent virtual meeting.
While rolling out such a program would be costly at first, University of California researchers found that single-payer systems could save the U.S. money as soon as the first year of operation — with an average drop of 3.5% in total health care spending. Costs would continue to drop over time and the largest savings would come from lower administrative costs and reduced drug costs, according to their review of 22 single-payer strategies.
What California can accomplish isn’t just tied to money and political will. The state also would have to secure waivers to bypass federal rules and get flexibility on how to spend federal dollars. In May, Newsom made the initial ask in a letter to President Joe Biden.
“The big determinant of whether Sacramento will be able to move on single payer is who is in charge in Washington, DC,” Kousser said. “It probably would have taken a Bernie Sanders victory for any state to move forward. Trump would actively block it, but Joe Biden won’t actively encourage it.”
A ‘master plan’ for older Californians
Before the pandemic, Newsom recognized the state was falling short of meeting the needs of its 65 and older population, which is expected to grow by 4 million people by 2030. In mid-2019, he ordered the creation of a blueprint that would set targets to make California more “age friendly.”
The state unveiled its Master Plan for Aging in January with goals around housing affordability, health care, caregiving and economic security. But the work to meet its goals is just beginning. The plan comes with a scorecard that will track the state’s progress over the next 10 years.
Aging advocates say the state’s goals have become more important than ever after a pandemic most dangerous to seniors. Almost three-quarters of all California’s COVID-19 deaths were among residents 65 and older. The master plan comes with recommendations to redesign nursing homes, noting that their residents made up a third of all pandemic deaths.
This year’s state budget allocates $3.3 million to roll out the plan. Separately, the budget also includes boosts in nutrition and food assistance programs for older Californians, and permanently restores a 7% cut in hours for Medi-Cal’s in-home supportive services that aid seniors and people with disabilities.
“The best news about progress in the master plan is that this new budget includes significant new investments in aging, health care and long-term care programs that are really going to help us move faster,” said Kevin Prindiville, executive director at Justice in Aging, who serves on one of the plan’s committees.
One big win is $805 million to renovate and expand residential care facilities for seniors who have been homeless or are at risk of homelessness, he said.
Budget dollars, however, are a mix of ongoing and one-time funding, which means that in tougher economic times, it could be difficult to retain the money needed to build these programs.
“This will require ongoing work to make sure the funding is there in the future,” Prindiville said. “But we’re definitely on an on-ramp and this budget gives us real momentum to build out these systems.”