California residents may be taxed if they do not buy health insurance, if the legislation that was approved by California’s Legislature on Monday subsequently gets approved by Governor Gavin Newsom. Newsom seems likely to approve the legislaton, having proposed a similar plan a few months earlier. If so, the law would become effective January 1, 2020.
Health insurance requirement
The requirement for everybody to buy health insurance or pay a penalty was an important part of the federal Affordable Care Act because it in helped avoid a skewed insured population. The U.S. Supreme Court had upheld this requirement, ruling the penalty a tax. Republicans in Congress had eliminated this requirement in 2017, which became effective this year in 2019.
The bill was passed by Democrats, minus one who voted against it – Rudy Salas Jr. No Republican legislator voted for it. The Democrats’ goal is for everyone in California to have health insurance. If the bill becomes law, California would join Massachusetts, New Jersey, Vermont and Washington, D.C., next year in financially motivating people to buy health insurance.
Eligibility
California currently provides government health benefits to children living in the country illegally. On Monday, the bill would extend the coverage to people up to age 25.
Residents exempt from the law include people living in the country illegally, people in prison, and American Indian tribe members.
Criticisms
The money obtained from the penalty would be used to help others pay for their health insurance. “These new subsidies will impact almost 1 million Californians and help them get the health care access that they deserve,” said Democratic Assemblyman Phil Ting of San Francisco.
Unfortunately, most of the people who pay the penalty are people who have lower incomes. And what ends up happening is that the penalty money is used to help people with higher incomes to pay for their health insurance. Republican state Sen. John Moorlach said that 82% of Californians who paid the penalty for not having health insurance in 2014, had incomes of $50,000 or less. “This trailer bill will take money away from people making $30,000 to $50,000 a year and give it to people making between $75,000 and $130,000 a year,” GOP Assemblyman Jay Obernolte said. “That makes no sense.”
Another criticism of the bill came from Democratic Sen. Maria Elena Durazo from Los Angeles, who said that “we’ve missed an opportunity to create fairness and inclusion” by not providing health care coverage to seniors living in the country illegally.
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Catherine oversees UBF's daily operations and client retention strategy. She has a background in mathematics, economics, and human resources. In her spare time, she enjoys spending time with her family, taking the dog on long walks, and caring for a small and unfruitful garden.