Healthcare Affordability in California

By Kelly Wilson and Caroline Smith

 Historical Context image
1929- Ross-Loos Clinic opens in Los Angeles, first prepaid group practice of physicians providing medical care for workers in the city's water department. Established in 1929 by physicians, Donald E. Ross and H. Clifford Loos. The plan of monthly payments assured benefits of socialized medical and hospital care to over two thousand employees of the Los Angeles County Department of Water and Power and their families.

1938- Blue Shield Physician Insurance established. Blue Shield Physician Insurance was established in the California Medical Association House of Delegates to create California Physicians' Service (CPS) on Dec. 18 1938 by a vote of 114-12.

1945 -Kaiser's “Permanente Health Plan” offered to the public, having served dam, steel, and ship-building workers. Sidney R. Garfield, MD, wanted to keep practicing his new form of health care delivery, and Henry J. Kaiser wanted the plan to continue as well. Therefore, on July 21, 1945, the Permanente Health Plan officially opened to the public. In 10 years, enrollment surpassed 300,000 members in Northern California. In these early years, the success of the health plan was largely the result of support from unions. Two unions — the International Longshore and Warehouse Union and the Retail Clerks Union — were the driving force behind bringing the health plan to Los Angeles.

1959- Federal Employees Health Benefits Act: FEHBA and its subsequent amendments established the parameters for eligibility; election of coverage; the types of health plans and benefits that may be offered; and the level of the government’s share of premiums. They also established an Employees Health Benefits Fund to pay for program expenses and put forth provisions for studies, reports, and audits.

1962- CalPERS,  is an agency in the California executive branch that manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families. In 1962 allowed to provide health insurance benefits to State of California employees.

1965- Medicare and Medicaid established. On July 30, 1965, President Lyndon B. Johnson signed the Social Security Amendments of 1965 into law. With his signature he created Medicare and Medicaid, which became two of America's most enduring social programs. 

1971- Medi-Cal coverage via capitated "prepaid health plans" authorized in the reform package of Governor Ronald Reagan. 

1973- Federal Health Maintenance Organization Act- Was  Federal program to develop alternatives to the traditional forms of health care delivery and financing by assisting and encouraging the establishment and expansion of HMOs.

1975- Knox-Keene Health Care Service Plan Act- is the set of laws or statutes passed by the State Legislature to regulate health care service plans, including health maintenance organizations (HMOs) within the State. These regulations are codified under title 28 of the California Code of Regulations.

1979- HMO Act Amendments remove barriers to for-profit operations-  a Federal program to develop alternatives to the traditional forms of health care delivery and financing by assisting and encouraging the establishment and expansion of HMOs.

1982- California legislation enables preferred provider contracting, launching the PPO product trend.  PPOs came into existence because the oversupply of hospital beds and physicians in many areas of the country allowed payers to negotiate discounts with these providers. Essentially, a surplus of providers equates to a buyer's market.

1993 -State expands county-based Medi-Cal managed care. In 1993, the department released a "strategic plan" intended to rapidly move the Medi-Cal Program toward a "managed care" approach for providing services to Medi-Cal beneficiaries. In this section, we make several recommendations regarding the department's proposed expansion.

1997- Children's Health Insurance Program established. Is an Insurance program that provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid but not enough to buy private insurance.

1999- California's Patient Bill of Rights. A right to privacy, dignity, respect, and humane care. A right to receive treatment for a diagnosed mental disorder that is provided in a method least restrictive of individual liberty and promotes personal independence.

2003-Medicare Part D is established. Medicare Part D is simply insurance for your medication needs. You pay a monthly premium to an insurance carrier for your Part D plan. In return, you use the insurance carrier's network of pharmacies to purchase your prescription medications.

2010- Commercial enrollment is dominated by managed care; 53% HMOs; 24% PPOs; and 23% self-insured plans Health Care Reform: The Affordable Care Act. 
  • The Affordable Health Care Act was signed into law by President Barack Obama on March 23, 2010, along with a fixed bill on March 30th.
  • After coverage expansions under the Affordable Health Care Act (ACA) took effect in 2014, California’s uninsured rate declined substantially from 17% to about 7%, where it has held steady since 2016. California’s decision to expand Medi-Cal to cover most low-income adults without children or a disability. 

Healthcare Today imageHealthcare Today image
Healthcare is a growing issue in California today, where 2.7 million Californians are uninsured. Residents are being forced to pay high out-of-pocket costs due to insurance costing more money than what they would spend on actual care. Healthcare insurance premiums for employer coverage have increased 249% between 2002 and 2017. The average annual premium costs for single coverage insurance rose 4% to $7,470 and the annual premium for family coverage also rose 4% in 2020 to $21,342, which is nearly 1/3 of the state's median family income. The increasing prices are being driven by health care industry consolidation as well as anti-competitive behavior. These high prices are concerning considering that between 2008 and 2018, real median wages for Californians mostly stagnated while premiums continued to increase, even after accounting for inflation.

Currently, there is no single state agency responsible for monitoring health care cost trends across job-based coverage, individual markets, or medicare. However, the California State Government is considering creating an Office of Healthcare Affordability with an Office of Statewide Planning and Development. This department was initially part of Governor Gavin Newsom's 2020 budget proposal, but it was abandoned amiss the state's Covid-19 response. Now, this department has been proposed again in the California Health Care Quality and Affordability Act, which will be used to collect state healthcare expenditure data. If passed, the first annual report on the data collected would be published before June 26, 2026, which would provide policy solutions for addressing high healthcare costs. This act passed through the California State Assembly on June 3, 2021 and now awaits approval by the California State Senate. 

A detailed solution of how the California State Government can address the issue of health are affordability.

The State of California can create a department inside the California Health and Human Services Agency devoted to healthcare affordability with the main goal of setting up a program that can help low income families receive healthcare. It is crucial for low income families, specifically those living under the poverty line, to be addressed first until the program can expand its efforts to support a broader range of families. Low income families can be identified through their income level marked on their tax forms. The department can reach out to these families, offering assistance with health insurance. The department can also offer educational seminars in order to inform these families about registering for health clinics and allow them to receive assistance from experts on how to sign up for health insurance. 

In addition to this department, the California State Congress can propose a bill that forces all California businesses to offer healthcare insurance for full time employees. If the bill is passed, the state would help to provide funding for businesses to enact this program. 

In order to pay for these two solutions, the state government could request a grant from the federal government, as well as reallocate the margin of the state budget that was used for Covid-19 response to funding the programs enacted by the Department inside the California Health and Human Services Agency as well as the bill passed by the State.


Here is a list of some ways the people of California can help push the government to enact the proposed solution.

Here is a list of some ways the people of California can help push the government to enact the proposed solution:

  • Create media posts on platforms such as Facebook or Twitter to spread awareness of available and affordable healthcare in California. If enough people share campaign messages on Twitter or Facebook with a hashtag, the message may ‘trend’ and receive even more attention via app interfaces that highlight trending topics for users and widely followed major media outlets that amplify these memes by reporting on them some campaigns and social movements, such as the #BlackLivesMatter, which came to be known by their hashtag.
  • Pressure local newspapers as well as news stations to spread awareness regarding the need for a department that provides healthcare for low income families by stationing peaceful protests at local government buildings, such as the State Capital in Sacramento, City Halls throughout California, state parks, and local parks.  
  • Send letters or emails to government officials expressing concerns on the issues related to healthcare in California, which would include uninsured and under-insured portions of the population as well as the need for a bill that forces businesses to grant health insurance to full time employees. Letters published in local newspapers, magazines, or blogs are often read by a politician or his/her staff, especially if they mention the politician or are related to an issue she/he is working on; the same is often true for call-in segments on local TV and radio.
  • Work with your city’s council to come up with efficient ways to advocate for a new healthcare department and bill. Talk to friends, peers, teachers, family to both spread and gain awareness regarding affordable healthcare in California.