Reich

1. TO: Governor Jerry Brown, California
FROM: Jonathan Palisoc, Master of Public Policy Candidate, UC Berkeley, 2018
DATE: 1 December 2016
RE: Healthcare and Inequality in California
Executive Summary.
With the election of Donald Trump, improving and sustaining healthcare should be the
top priority of California. Since declaring his candidacy, Trump has promised to dismantle the
Affordable Care Act (ACA), which would throw millions back into uninsured poverty, as well as
likely increase premiums on the middle class. In the lens of reducing inequality, low-income
healthcare is important as it provides a base for poorer families and ensures they are able bodied
and ready to contribute to the workforce; the ACA is effectively a wealth transfer that empowers
those in poverty to be healthy and be on a more even playing field. As a leader in the current
healthcare exchanges with Covered California and a progressive trailblazer in expanding health
coverage, our state must continue its push to make health care affordable and accessible to all
Californians.
Current Issue.
ACA Issues.
Along with the election of Trump, Republicans have used increasing health care
premiums as evidence of Obamacare’s failure. As such, conservative politicians have begun the
push to repeal and replace the ACA. Alongside increasing premiums, the exiting of large HMOs
from the ACA exchanges is putting pressure on the current administration to provide a fix before

2. consumers are left with a lack of plan choice on top of increasing costs. To combat Trump’s
repeal and replace initiative, California must show that these issues can be fixed at the state level.
ACA Victories.
Although there have been issues inside the ACA, California has been a shining example
of success. In terms of the exchange, Covered California saw a smooth implementation as has
enrollment of over 1.5 million. Currently, 12 health plans offer coverage on the exchange, and
California has seen some of the lowest premium hikes in the nation (DHCS). Next to the
exchange, California’s Medicaid expansion has brought the enrollment of over 3.4 million
individuals, up from an original projection of 800,000 (DHCS). 70% of Covered California
enrollees reported their experience as positive, alongside more than half of Medi-Cal enrollees
reporting the experiences as “excellent” or “very good” (CalHealthline). The sheer number of
enrollees, who are mostly under the 138% of the federal poverty level (FPL), shows that a repeal
of the ACA would adversely affect some of our state’s highest at-risk and poverty stricken
individuals (Leonhardt).
Recommended Policies.
Fight to keep the Medicaid Expansion.
California’s Medicaid program, known as “Medi-Cal”, currently covers over 13.5 million
Californians, or over one-third of the entire state’s population. Of those enrollees, 70% are ethnic
minorities. Any repeal of the Medicaid expansion would devastate these populations and
decrease their effective income (Tavernise). Those who lost coverage would likely go back to
their county’s “indigent program” which are programs California counties are obligated run for
their poorest residents. However, these programs offer bare-bones coverage and have extremely
low income ceilings to qualify (< 66% FPL). Otherwise, the increase in uninsured would likely

3. cause a large increase in visits to the ER, which would increase costs and likely cause increases
in premiums to the middle class. A healthy Medicaid expansion ensure that none of these
negatives happen while also providing top quality care to low-income individuals.
Continue to push for lower drug costs.
Although the failure of Prop 61 has dampened hopes that drug companies can be stopped,
California should continue to fight for higher negotiating power when buying prescription drugs.
For 2017, Medi-Cal has budgeted over 1 billion dollars for Hepatitis-C drugs alone
(CalHealthline). High drug costs not only increase costs to the state, but they also cause
proportionally unsound damage to the lower and middle-class. When governments are unable to
negotiate fair prices for drugs, they often have to pass some of the cost to the consumer. When
this happens, the lower and middle class cannot afford it, which causes them to sometimes seek
drugs illegally. This, in turn, increases crime, increases criminal justice costs, increases mental
and physical health problems, and increases use and cost of the healthcare system (Kolata).
Substance abuse is a vital problem in California and drug pricing is a culprit that should not be
ignored.
Advocate undocumented access to health care.
Recently, California has allowed undocumented immigrants to buy health insurance from
Covered California, as well as expanded Medi-Cal to undocumented children. Our state should
continue that push by allowing undocumented enrollment in Medi-Cal to those who qualify. To
sate the criticisms of those who say the cost would be too high, implement a sliding-fee scale
where undocumented Medi-Cal enrollees will pay premiums and copays, but at a highly reduced
cost. This, alongside the associated reduction in emergency room visits, will reduce overall

4. health costs and improve quality of life for some of California’s most impoverished
communities.
Challenges and Counterarguments.
Many of these proposals potentially have a significant cost to federal government.
Combined with criticisms of the ACA including increased premiums and plans pulling out of
exchanges, the political climate may be difficult for building Obamacare rather than tearing it
down. For first steps, we recommend going to California foundations such as the California
Endowment and Blue Shield Blue Cross Foundation. These foundations have pushed for
expanded coverage in California consistently, as evidenced by their advertising for CA Senate
Bill 4, which pushed for immigrant health care coverage. If critics point to HMOs dropping out
of the exchange, point to California’s Local Initiative Medi-Cal plans, which are county run
plans that would be similar to Clinton’s proposed public option plans on the Exchange. In terms
of cost, the CBO has cited multiple times that the ACA has reduced projected healthcare costs,
not increased; any repeal would only drive up health related and administrative costs (Porter).
Conclusion.
In America, there is a vast difference in health outcomes and health coverage between the rich
and poor. The replacement and repeal of the ACA would only allow the rich to get further ahead
and for poor to never catch up; poor health is an extreme detractor of success. By increasing
coverage and access to care, California can continue to be a leader in providing opportunity to
the lower and middle class.

5. Works Cited
CalHealthline. "Medi-Cal To Spend Nearly $1 Billion On Hepatitis C Drugs Next Year."
California Healthline. CHCF, 26 Oct. 2016. Web. 01 Dec. 2016.
CalHealthline. "Patient Satisfaction Among Low-Income Patients on the Rise, Survey
Says." California Healthline. N.p., 10 Feb. 2015. Web. 01 Dec. 2016.
California Department of Health Care Services. State of California, n.d. Web. 01 Dec. 2016.
CovereredCA. "New Survey Shows the Affordable Care Act Has Dramatically Reduced
California." Covered California Daily News. N.p., n.d. Web. 01 Dec. 2016.
Kolata, Gina, and Sarah Cohen. "Drug Overdoses Propel Rise in Mortality Rates of Young
Whites." The New York Times. The New York Times, 16 Jan. 2016. Web. 01 Dec. 2016.
Leonhardt, David. "In Health Bill, Obama Attacks Wealth Inequality." The New York Times.
The New York Times, 23 Mar. 2010. Web. 01 Dec. 2016.
Porter, Eduardo. "Rationing Health Care More Fairly." The New York Times. The New York
Times, 21 Aug. 2012. Web. 01 Dec. 2016.
Tavernise, Sabrina. "Life Spans Shrink for Least-Educated Whites in the U.S." The New York
Times. The New York Times, 20 Sept. 2012. Web. 01 Dec. 2016.