California Senate Votes To Open Up Obamacare To 2.5 Million Illegal Residents

Published on July 22nd, 2015

Robert Laszewski
June 21, 2015
Forbes Opinion

King V. Burwell opponents said killing subsidies would blow up Obamacare­­–now in California they want to open up unsubsidized care to illegal Californians.

State Senator Richard Lara has already moved a bill through the California State Senate that would allow illegal immigrants to buy unsubsidized health insurance in the state’s Obamacare exchange. The state would have to receive a federal waiver from the Obama administration before implementing it.

The bill would also extend coverage to illegal residents under the age of 19 to enroll in California’s fully paid-for Medicaid program.

The Pew Research Center has estimated that there are 2.5 million illegal immigrants in California.

To say that granting any kind of access to Obamacare for illegal immigrants is controversial is an understatement. But for now, I want to focus just on the insurance issues.

Last month, Obamacare supporters were adamant, and rightly so, that a Supreme Court decision in favor of the King v. Burwell plaintiff would have killed the insurance subsidies in at least 34 states and would have forced the collapse of Obamacare. Their argument was that without subsidies millions of people would have been forced to drop their coverage leaving only the sickest willing to pay for the then far more expensive cost of unsubsidized insurance. The program would have no longer been sustainable.

When Obamacare first passed, the President and the Democrats argued that the individual mandate, and its penalty, was crucial to the new health law’s being able to get adequate enrollment so that we would have enough healthy people joining to pay for the sick. They repeated those arguments three years ago before the Supreme Court in the NFIB v. Sebelius case that could have killed the individual mandate’s penalties.

So, in two Supreme Court cases as well as the original selling of Obamacare, advocates have argued that the combination of the subsidies and the individual mandate were crucial to Obamacare’s being able to get enough healthy people to offset the costs of the sick and its ability to survive.

But now in California, the State Senate has already passed Senate Bill 4 and sent it to the State Assembly. SB 4 would make Obamacare health insurance available on a guarantee issue basis to illegal immigrants on the Covered California exchange:

  • Without a subsidy.
  • To people who would not have to comply with the individual mandate.

So a new class of people would be allowed to access Obamacare on Covered California without having to comply with the individual mandate legal residents and citizens have to comply with.

They also would not be subsidized and would be forced, often as poor people, to pay the full price of the health insurance in order to get their claims paid.

So, who would sign up?

I will suggest that the overwhelming number of illegal residents who would sign up for unsubsidized coverage that would otherwise be unaffordable for them would be the people who would find a way to pay a few hundred dollars in premiums in order to get thousands of dollars in coverage—the sick who could literally make money off the deal.

So, all of these Obamacare advocates who told us last month during the King v. Burwell debate that Obamacare would collapse if millions of people didn’t have subsidies but still had guaranteed issue access to insurance now think it’s a good idea to do just that for millions of poor illegals in California.

So, all of these people who told us during the 2012 NFIB v. Sebelius debate that the combination of the individual mandate and subsidies was key to a functioning Obamacare don’t think that’s necessary when covering a new class of people through Covered California—millions of poor illegal immigrants in the state.

There’s a reason illegal immigrants were excluded from the Affordable Care Act’s exchanges by the law’s architects in the first place.

Subsidies would be crucial to a sustainable insurance system for the overwhelmingly poor illegal immigrants that would be required to buy coverage. But they are illegal immigrants, just how would we accomplish that? Dealing with this very real issue of access to health care via immigration reform would seem to make a lot more sense than this proposed convoluted backdoor to an already struggling Obamacare insurance system.

And consider this. Passage of SB 4 could be a real boon to the business of health care delivery in California. California’s impressive medical system could be the leader in international medical tourism.

SB 4 would also make it clear that a foreign person could land at LAX, give Covered California a call and sign up for an almost full pay Platinum plan for a few hundred dollars a month, on the first of the following month when their coverage became effective show up at Cedars-Sinai Medical Center and have thousands of dollars of treatment, get back on the plane and go home, and then drop the coverage.

SB 4 doesn’t have any requirements for how long a person has to be in the country to enjoy these benefits. All SB 4 says is, “No individual in California should be excluded from obtaining coverage through the California Health Benefit Exchange by reason of immigration status.”

Advocates argue that illegal immigrants can already buy guarantee issue health individual insurance coverage off the exchange in California or anywhere else—one of the little known gems in Obamacare. But I doubt many know that and exposing all of this may be a better argument for closing that loophole than expanding, facilitating, and promoting it through Covered California.

If SB 4 becomes California law, it has already passed the State Senate 28-11, and the Obama administration approves it, “Give me your poor, your tired…” could now be expanded to give me your sick.

America is a wonderful place.

Here is the text of SB 4—all five pages of it.


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