SACRAMENTO, Calif. (AP) — Sydney Winlock owns a small business with his wife in Northern California, and they had a strange conversation recently: Should they make less money so they can afford their health insurance?
The couple makes too much money to qualify for help from the federal government in paying their monthly insurance premiums, which now cost them $18,000 a year. But if they scale back their business and make less money, they would qualify for the help.
“Last year we had a great year. What did it do for us? It kicked us right out and we no longer get the subsidies,” Winlock said. “You have to play those games.”
Winlock and others like him could soon get help from California. Democratic Gov. Gavin Newsom wants California to become the first state to offer subsidies of about $100 a month to help people who earn as much as 600% of the federal poverty level pay for their insurance plans.
That means a family of four earning about $150,000 a year would qualify, as would individuals making around $72,000. The federal government only offers help up to 400% of the federal poverty line.
The proposal is part of Newsom’s budget, which he’s now negotiating with lawmakers. He touted it at a round table with small business owners Tuesday to kick off a statewide tour of his health care policies. It’s an approach Newsom has been using during his first five months in office to bring his policy ideas directly to people who would benefit from them amid behind-the-scenes negotiations with state lawmakers.
California would pay for the new subsidies by taxing the uninsured. Newsom wants to bring back a law requiring everyone to purchase health insurance or pay a penalty. The mandate was a key piece of former President Barack Obama’s health care overhaul law, but Republicans in Congress recently eliminated it.
“There is a certain irony in paying for subsidies to help some people buy insurance with penalty payments from people who are going without,” said Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation.
Levitt noted if the subsidies entice more people to buy health insurance, there will be a smaller pool of uninsured people to fund them.
But Newsom’s budget avoids that potential problem by eliminating the new subsidies in three years. Lawmakers would have to vote to keep them. It’s one of several proposals Newsom linked a so-called sunset provision to, arguing the state may not have enough money to sustain them in future years.
“It’s just a pragmatic way of looking at the world in an honest way,” Newsom told reporters. “Perfect is not on the menu. But better than any other state in America is.”
While California would be the first state to provide financial help to people making up to 600 percent of the poverty line, it would not be the first to reinstate the individual mandate. New Jersey and Massachusetts are among several states that have already reinstated it.
Assemblyman Jay Obernolte, the top Republican on the chamber’s budget committee, called Newsom’s plan “nonsensical.” He also said offering incentives for incomes as high as $150,000 for a family of four may not help the state lower its uninsured rate.
“If our goal is to lower the number of people who don’t have health insurance in California, we need to make sure we’re putting subsidies in areas to achieve that,” he said. “It’s not clear to me subsidizing insurance in that income range is going to be effective.”
The California Department of Finance estimates the proposal would result in 840,000 people getting subsidies. Winlock, the Northern California business owner, wants to be one of them.
“We have to have it,” he said. “We’re both active, but we are older — over 60 — so the rates are going up exponentially.”