California Withdraws Plan to Let Undocumented Immigrants Use State Exchange

Published April 10, 2017

California officials have withdrawn a proposal that would have allowed undocumented immigrants to purchase health insurance through Covered California, the state’s health insurance exchange.

The proposal would have allowed state residents currently “ineligible regardless due to immigration status” to purchase “benefits packages” with “identical cost sharing structures, provider networks, and service areas” to plans currently offered on the exchange, according to Covered California’s application to the federal Centers for Medicare and Medicaid Services (CMS). Noncitizens would not have qualified for income-based federal subsidies.

Senate Bill 10, signed by Gov. Jerry Brown (D) in June 2016, required Covered California to submit the application, which exchange officials submitted in September and resubmitted in December 2016.

At the request of SB 10 sponsor Sen. Ricardo Lara (D-Bell Gardens), Covered California Executive Director Peter Lee withdrew the application on January 18, one day after CMS informed him it was beginning the six-month federal decision-making process, according to Lee’s withdrawal letter.

Lara feared the administration of President Donald Trump would use information collected under the program as “part of a wasteful and inhumane campaign against immigrants who are working hard and playing by the rules,” according to a written statement obtained by Kaiser Health News.

Step Toward Subsidizing Illegals?

Marc Joffe, director of policy research at the California Policy Center, says approval of the waiver might have proven a first step toward subsidizing health insurance for undocumented immigrants.

“Since there is a widespread belief that health care is a right, and given the way government programs grow incrementally, I can imagine that subsidizing illegal immigrant premiums would have been suggested at some point,” Joffe said. “We provide a number of taxpayer-funded services to undocumented immigrants, including public education and subsidized in-state tuition at public colleges and universities.”

Sally Pipes, president and CEO of the Pacific Research Institute, says Obamacare is already providing insurance subsidies to illegal immigrants, and the CMS approval of the proposal would have further increased the impact on California’s taxpayers and economy.

“While it’s difficult to calculate the cost of federal subsidies for illegal immigrants, the federal government has already granted up to $750 million in tax credits to half a million Obamacare enrollees who were unable to prove their citizenship,” Pipes said. “On top of that, California would get a huge influx of illegal immigrants from other states and even countries seeking free or heavily subsidized health coverage, causing the price of health care to go up and increasing the tax burden on working Californians.”

‘Harmful Precedent’

California taxpayers also pay directly for the health care of undocumented immigrants, Pipes says.

“Californians are still shouldering exorbitant health care costs because of illegal immigrants, since the state mandates emergency and pregnancy care to people regardless of legal status,” Pipes said. “Thus, illegal immigrants are continuing to receive uncompensated care in expensive emergency rooms and community [hospitals] and other hospitals that receive federal government funds, spiking health care costs for everyone else.”

The Covered California proposal would have set a costly precedent for health care policy in the state, Pipes says.

“We must continue working against this harmful precedent of funding illegal immigrants’ health care in the state and restore a fair and rightful distribution of health care services in California,” Pipes said. “Californians deserve better. This is one reason why repeal and replace of Obamacare is so very important and what the American voters want.”

Road to Serfdom

Allowing undocumented immigrants to buy insurance though Covered California might have resulted in lower premiums, Joffe says.

“I would have expected the additional purchasers would have lowered rates overall, by increasing the size and diversity of the insured pool,” Joffe said.

Lower premiums might not have offset taxpayers’ cost of subsidizing the health insurance of undocumented immigrants, Joffe says.

“Personally, I favor more open immigration,” Joffe said. “That said, we do believe in fiscal sustainability, so I do think the state has to be careful about offering benefits to classes of new arrivals who may not provide much in the way of offsetting tax revenues.”

Ben Johnson ([email protected]) writes from Stockport, Ohio

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