A patient gets her ear examined
(Anne Wernikoff for CalMatters)
Health & Wellness

Millions of Californians at risk of losing health coverage when federal COVID programs end

Expiration of two COVID-19 emergency programs means Californians could lose their Medi-Cal insurance or find Covered California unaffordable.

Millions of Californians could lose or transition into new health coverage as two federal programs that helped many keep or afford insurance are set to expire this year.

Two to three million Californians could lose their Medi-Cal coverage, some as soon as this summer, after the federal government’s COVID-19 public health emergency ends, now scheduled for next month. In addition, 150,000 Californians might not be able to afford their Covered California health plans unless federal subsidies from the American Rescue Plan, which are set to expire at the end of this year, are renewed, according to a report released Wednesday.

The COVID-19 pandemic triggered investments and protections that increased the number of people with health insurance. In California, close to 14.5 million people are enrolled on Medi-Cal — the most ever — and a record 1.8 million people bought a health plan through Covered California during the most recent sign-up period.

But those federal protections are temporary. And state health officials are now preparing for when they expire, examining how to keep the most Californians covered.

Medi-Cal and the public health emergency

Before the pandemic, people on Medi-Cal had to renew their coverage every year, but the process has been frozen for the past two years.

During the federal government’s public health emergency, states cannot drop people from Medicaid — known as Medi-Cal in California, the health insurance program for low-income people.

But the emergency is scheduled to expire after April 15 unless it is extended for another 90 days by the Biden administration.

An estimated two to three million Californians could lose Medi-Cal coverage because they now earn too much to qualify or they fail to provide information needed to stay on the program, health advocates explained.

While many people could transition from Medi-Cal to other types of insurance, advocates fear many could get lost in the administrative complexities and lose coverage.

Jacey Cooper, the state’s Medi-Cal director, said the state would have to begin the process of redetermining who is eligible in May if the emergency order ends in April. Because enrollees need a 60-day notice, people who are due to update their eligibility information in July would need renewal packages by May.

Federal guidance gives states 12 months to complete reviewing people’s eligibility.

For most adult enrollees, the limit to qualify for Medi-Cal is 138% of the federal poverty level, about $17,609 for single people and $36,156 for a family of four. Eligibility takes into account income and household size. (Certain groups like pregnant women qualify at slightly higher incomes.)

Anthony Wright, executive director at Health Access, said people falling off Medi-Cal is not necessarily a bad thing — people’s incomes may have increased and now they are eligible for subsidized coverage on Covered California, or some may have regained employer benefits.

“Our hope is that this number (of 2 to 3 million) doesn’t reflect the number of people who will become uninsured, but rather the number of people leaving Medi-Cal, which could be for good reasons,” he said.

Still, people can get lost in the paperwork or simply never learn that they are supposed to submit a renewal application, said Monika Lee, associate communications director with the California Pan-Ethnic Health Network.

“We are expecting losses,” she said. “If the state mails something to your house and you don’t live there anymore, how will you know you are losing coverage?”

Cooper has a similar concern, noting that her department estimates that 7 to 10% of enrollees have changed their address during the past two years. “We need updated contact information so that when the public health emergency does end, we can reach and contact individuals,” she said. People can update their contact information at their county Medi-Cal office.

Cooper said her department will help people who no longer qualify for Medi-Cal transition into other types of coverage, whether it be employer-based insurance or a low-cost health plan through Covered California.

But Covered California also warns that a separate issue — an upcoming expiration of federal aid — could affect whether those formerly on Medi-Cal sign up or not.

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Covered California and the federal subsidies

The federal government’s American Rescue Plan last year provided California with around $3 billion designated for additional financial aid through Covered California. As a result, more people signed up, and 24% of consumers enrolled in plans with monthly premiums of $10 or less, according to Covered California.

The enhanced federal subsidies are locked in for the rest of this year, but if Congress lets it expire, enrollees would see their premiums go up next year. Covered California estimates that low-income Californians could see their monthly premiums double, from an average of $65 to $131. Middle-income enrollees would no longer receive financial help.

About 150,000 people could be forced to drop their plan because they could no longer afford it, according to the Covered California report.

People across the country, “without the expansion of the American Rescue Plan subsidies (will) face a sticker shock that will mean coverage is not within reach for them. Many of those are likely to be from communities of color,” said Peter V. Lee, executive director of Covered California.

Covered California’s report shows significant enrollment gains among these communities, including a 33% boost in enrollment among African Americans this year compared to 2020.

California in 2020 became the first state in the nation to offer aid to middle-income residents who previously earned too much to benefit from federal subsidies. But the increased help provided by the federal government was bigger, and it replaced state aid.

“There is no hard deadline for when the federal government needs to act, but the sooner the better,” Lee said.

That’s because the state usually announces the rates it negotiates with insurance companies for the following year sometime around July, and by October people start getting renewal notices with an estimate of their new costs. Lee said insurers could decide to raise premiums if they expect fewer people to sign up.

“It’s not just fewer people, it’ll be fewer healthier people,” Lee said.

If the increased assistance goes away, healthy people will be among the first to drop their coverage, Lee said. And the sicker the pool of enrollees, the higher the premiums for everyone.

The good news, Wright said, is that Congress does have incentive to act and renew this help. “It would be in no one’s interest for premium spikes to be announced in September or October of an election year,” he said.