California is expanding health care coverage for low-income immigrants in the new year

SACRAMENTO, Calif. (AP) — More than 700,000 immigrants living illegally in California will gain access to free health care starting Monday under one of the state's most ambitious coverage expansions in a decade.

It's an effort that will eventually cost the state about $3.1 billion per year and inches California closer to Democrats’ goal of providing universal health care to its roughly 39 million residents.

Democratic Gov. Gavin Newsom and lawmakers agreed in 2022 to provide health care access to all low-income adults regardless of their immigration status through the state’s Medicaid program, known as Medi-Cal.

California is the most populous state to guarantee such coverage, though Oregon began doing so in July.

Newsom called the expansion “a transformative step towards strengthening the health care system for all Californians" when he proposed the changes two years ago.

Newsom made the commitment when the state had the largest budget surplus in its history. But as the program kicks off next week, California faces a record $68 billion budget deficit, raising questions and concerns about the economic ramifications of the expansion.

“Regardless of what your position is on this, it doesn’t make sense for us to be adding to our deficit,” said Republican Sen. Roger Niello, the vice-chair of the Senate Budget and Fiscal Review Committee.

Immigration and health care advocates, who spent more than a decade fighting for the changes, have said the expanded coverage will close a gap in health care access and save the state money in the long run. Those who live in the state illegally often delay or avoid care because they aren’t eligible for most coverage, making it more expensive to treat them when they end up in emergency rooms.

“It’s a win-win, because it allows us to provide comprehensive care and we believe this will help keep our communities healthier,” said Dr. Efrain Talamantes, chief operating officer at AltaMed in Los Angeles, the largest federally qualified health center in California.

The update will be California's largest health care expansion since the 2014 implementation of former President Barack Obama's Affordable Care Act, which allowed states to include adults who fall below 138% of the federal poverty level in their Medicaid programs. California's uninsured rate dropped from about 17% to 7%.

But a large chunk of the population was left out: adults living in the United States without legal permission. They are not eligible for most public benefit programs, even though many have jobs and pay taxes.

Some states have used their tax dollars to cover a portion of health care expenses for some low-income immigrants. California first extended health care benefits to low-income children without legal status in 2015 and later added the benefits for young adults and people over the age of 50.

Now the last remaining group, adults ages 26 to 49, will be eligible for the state’s Medicaid program.

The state doesn’t know exactly how many people will enroll through the expansion, but state officials said more than 700,000 people will gain full health coverage allowing them to access preventative care and other treatment. That's larger than the entire Medicaid population of several states.

“We’ve had this asterisk based on immigration status,” said Anthony Wright, executive director of Health Access California, a consumer advocacy group. “Just from the numbers point of view, this is a big deal.”

Republicans and other conservative groups worry the new expansion will further strain the overloaded health care system and blasted the cost of the expansion.

State officials estimated the expansion will cost $1.2 billion the first six months and $3.1 billion annually thereafter from the budget. Spending for the Medi-Cal program, which is now about $37 billion annually, is the second-largest expense in the California budget, according to an analysis by the nonpartisan Legislative Analyst’s Office.

Earlier this month, the state Department of Finance sent a letter urging state agencies to cut costs in light of the deficit. It has not given specific directions about the Medicaid expansion, state officials told The Associated Press in December.

California’s expansion of Medicaid will face other challenges. The state is chugging through a review of Medicaid enrollees’ eligibility for the first time in more than three years that was prompted by the end of some federal pandemic policies. Many immigrants who had their coverage protected during the COVID-19 pandemic now find themselves ineligible because they no longer financially qualify.

John Baackes, CEO of L.A. Care Health Plan, the state’s largest Medi-Cal plan with nearly 2.6 million members, said roughly 20,000 members have lost their Medicaid coverage during the review process this past year and are looking to secure new insurance plans. His organization is juggling to help people navigate through both processes.

“People are being bombarded with information,” Baackes said. “I can’t imagine if somebody were having to maneuver through all this, why they wouldn’t be terribly confused.”

“The phones are ringing off the walls," he said.

Fear and distrust are also barriers for the expansion, said Sarah Dar, policy director for the California Immigrant Policy Center.

Many immigrants avoid accepting any public programs or benefits out of fear it will eventually prevent them from gaining legal status under the “public charge” rule. The federal law requires those seeking to become permanent residents or gain legal status to prove they will not be a burden to the U.S., or a “public charge.” The rule no longer considers Medicaid as a factor under President Joe Biden’s administration, but the fear remains, she said.

More resources and effort are required to reach this population “because of the history of just being completely excluded and not interfacing with the health care system or with government programs at all for so long," Dar said.

California has more work to do to see the state’s uninsured rate hit zero, known as “universal coverage," Dar said.

For one thing, immigrants living in the U.S. without legal permission are still not eligible to purchase insurance from Covered California, the state-run exchange offering steep discounts for people who meet certain income requirements. A bill pending in the state Legislature, supported by the California Immigrant Policy Center, would change that.

“It’s going to be another really big undertaking,” Dar said. “And we know that revenues are down ... but it’s our job to make the case that, in times of economic downturn and whatnot, these are the communities that need the support the most.”

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Associated Press Reporter Adam Beam contributed to this report.