The May edition of the PPIC Statewide Survey, Californians and their Government, explores attitudes toward the governor’s latest proposed budget and gauges preferences in the gubernatorial primary. It also examines opinions on health care reform, the drought, poverty, and climate change.
PPIC research associate Dean Bonner presented the results of this wide-ranging survey at a lunch briefing in Sacramento last week.
At a PPIC event yesterday in Sacramento, a panel of experts credited health care reform for successfully expanding coverage to more than three million people in California. But the panelists also said the enrollment period—which just closed—is the very first step in an overhaul of the health system that will take many years to achieve and see many bumps along the way.
If the reform works, the future could be radically different, said Sandra Hernández, the president and CEO of the California HealthCare Foundation, and Mitchell Katz, director of the Los Angeles County Department of Health. Among the changes they envisioned: By 2024, there may be smaller hospitals, patients who have fewer doctor visits, and care designed to promote health—not just to treat illness.
Diana Dooley, secretary of the California Health and Human Services Agency, voiced concern that “cost is the elephant in the room.” Unless it is controlled, health care could claim a major and perhaps unsustainable share of the nation’s future GDP, she said.
The comments came during a conversation with PPIC president Mark Baldassare, before a live audience of nearly 300 at the Sacramento Sheraton Grant Hotel—with many also watching the event live online.
Today saw the release of the jobs report for March. California’s March unemployment rate was 8.1 percent, unchanged from February. Employers in California added 325,100 jobs over the past year–the largest increase in the nation. This is encouraging news for state residents who live near the bottom of the income ladder because, for a variety of reasons, workers in this category tend to be most affected by economic downturns.
Federal and state safety net programs target low-income families, and our work has shown that these programs play a major role in mitigating poverty. But a closer look shows that earnings from employment—not support from the social safety net—are the predominant source of income for working-age Californians living in poverty. Among poor adults with children, after-tax earnings made up 74 percent of family resources in 2011 (when the California unemployment rate was much higher than it is today, averaging 11.8 percent). In dollar terms, this translates into annual family earnings of about $22,200. For poor working-age adults with no children, earnings made up 69 percent of resources on average, or $10,400 (the much lower amount in part reflects the typically smaller family size of this group of adults).
Regionally, across California’s three most populous counties—Los Angeles, Orange, and San Diego—earnings made up between 75 and 82 percent of resources for poor adults with children. For those without children, earnings were 70 to 74 percent of resources. In California’s Central Valley, an economically struggling region of the state, earnings still made up the majority of family resources for poor working age adults: 59 percent for adults with children and 62 percent for adults with no children.
Although similarly detailed statistics for 2014 are not yet available, we can expect that earnings play at least as large a role in the resources of California’s poor today, now that the economy is on the upswing.
Open enrollment in California has ended, and preliminary tallies indicate that more than 3 million Californians will be enrolled in health plans through Covered California or will become new members of the Medi-Cal program. While it is still too soon to tell how many uninsured people have gained coverage, projections suggest about 4 million Californians will still lack health insurance. About 30 percent of these uninsured residents are estimated to be eligible for Medi-Cal and can enroll at any time during the year.
Uninsured residents who are not eligible for ACA coverage because they are undocumented immigrants—and those who did not purchase coverage through Covered California during the open enrollment period—will continue to rely on county programs and safety net providers, such as health clinics and emergency departments (EDs).
Access to these resources varies considerably across the state. Eligibility for indigent programs differs across counties, as there are no state standards for services provided or populations served. For example, most county indigent programs do not cover undocumented immigrants; these residents rely on clinics and EDs, particularly in counties that do not operate public hospital systems. Also, many counties set relatively low income thresholds for their indigent programs, limiting the number of uninsured residents who qualify for services.
Because the Medi-Cal expansion will cover many of the people currently served by county indigent care programs, the state is shifting funds previously allocated to county health programs. This fiscal year, state funding for county health programs was reduced by $300 million (under AB 85); there will be deeper cuts in subsequent years, as more Californians gain insurance coverage. The state will determine future funding reductions in consultation with the counties. In most cases, counties have selected a formula-based approach that accounts for the actual costs and revenues associated with indigent care programs to determine how much funding will be shifted back to the state.
Over the next several years, it will be important to monitor how these and other changes affect both safety net providers—including counties and public hospital systems—and the communities that continue to rely on them for health care.
The March PPIC Statewide Survey examines several major issues in California, including water, high-speed rail, marijuana legalization, and taxes. The survey also finds that three months before the primary, Governor Jerry Brown remains a strong favorite for re-election this year.
The wide-ranging survey also looks at Californians’ views on national issues—such as immigration and health care reform, and abortion —and provides approval ratings on federal elected officials.
PPIC research associate Jui Shrestha presented the results of the survey at a luncheon briefing in Sacramento.
Enrolling eligible, low-income Californians—including the 1.7 million uninsured projected to be eligible for Medi-Cal—is the focus of Affordable Care Act implementation right now. But in the longer term, there is a bigger question: How will the expansion of Medi-Cal under the Affordable Care Act impact the medical care and health of those who gain coverage?
It may come as a surprise, but the effect of insurance on health care use and outcomes is not well understood. The best recent evidence we have comes from the Oregon Health Insurance Experiment, a collaborative effort among academic researchers and state health department officials to evaluate how access to public insurance affects the health of low-income residents.
Early results from this rigorous study, which began in 2008, indicate that people who gain Medicaid coverage use more health care services—both inpatient and outpatient. The study found improvements in primary care access and significant increases in the use of preventive care such as mammograms and cholesterol screening. Medicaid coverage also reduced observed rates of depression and greatly reduced financial hardships and medical debt. But these positive results were not accompanied by signs of improved physical health outcomes, such as changes in blood pressure or cholesterol levels, and the study found evidence of increased use of emergency rooms among those who gained Medicaid coverage.
Of course, these results are from a short period of time: the first one to two years of coverage. If people are able to maintain coverage and consistent contact with providers, we could see improvements in health outcomes and decreased use of high-cost care settings such as ERs over time.
The good news is that these improvements may have gotten a head start in California.Before this year’s Medi-Cal expansion under the Affordable Care Act, the state expanded access to more services and better coordinated care through county-based programs under a federal waiver designed to prepare California for health care reform. This means that more than 600,000 uninsured residents, who will comprise a large share of new Medi-Cal enrollees this year, were brought into systems of care and already had the opportunity to receive needed services. This could mean that utilization in California will not increase as much as it did in the Oregon experiment. Evaluations of these county-based programs suggest that hospitalizations and ER visits could be reduced, but this will probably take longer than one or two years.
So while there is promising evidence of the benefits expanded Medicaid coverage can offer, including financial protection and increased use of preventive and primary care, it will probably take some time to bring about other desired changes.
The Assembly Budget Subcommittee for Health and Human Services is considering the level of financial support to CalWORKs, California’s cash assistance program for families with children. The panel held a hearing on Wednesday that began with testimony from PPIC research fellow Sarah Bohn about recent poverty trends and the impact of anti-poverty programs. Here are her prepared remarks.
My name is Sarah Bohn. I am an economist and research fellow at the Public Policy Institute of California. I hope most of you are familiar with PPIC, but for those who are not, we are a nonpartisan, independent research institute focused on major policy issues in the state. I will present the most recent facts on poverty in California and discuss their implications.
In the midst of the slow recovery from the Great Recession, attention has turned to the causes, consequences, and possible solutions to growing poverty in California and the nation as a whole. These have been topics of importance to researchers for a long time. In fact, today’s economic realities are largely the result of long-term trends. But the recession and the 50th anniversary of the War on Poverty have brought these issues into focus for the wider community and offers an opportunity for reassessment. For example, last December, the PPIC Statewide Survey found that a record-high share of Californians—66 percent—believe the state is divided into “the haves and the have nots.” Well below a majority identify themselves as part of the “haves”—a much higher share did so a decade ago.
The latest official poverty estimates suggest that about 16 percent of Californians are poor, and that as many as 22.5 percent of children in the state are poor. These numbers are an improvement over the year before, and are the first sign of a turnaround since the beginning of the Great Recession. But poverty rates today are 50 percent higher than they were five decades ago, when the War on Poverty began. Do today’s high rates of poverty mean that public investments aimed at mitigating poverty have not had their intended effect?
Unfortunately, official poverty statistics don’t give us the information we need to answer this question. The official poverty measure is based on a very simple formula developed in the 1960s. This formula has a number of shortcomings. First, it does not account for many of safety net programs—so it entirely misses the poverty-reducing effect of SNAP (food stamps) and the EITC (Earned Income Tax Credit), for example. Second, the formula has not kept up with sweeping changes in the cost of living since the 1960s. It does not reflect the increase or variation in housing costs across different places. And it doesn’t account for the fact that many families face different sorts of expenses than they did in the 1960s—like higher medical out of pocket expenses and child care costs.
These shortcomings prompted a national effort to develop alternative measures of poverty, which began to coalesce in the 1990s. In 2011, this effort produced the Census Bureau’s Supplemental Poverty Measure, which provides detailed new estimates of poverty for the U.S. In 2013, a collaborative effort between PPIC and Stanford Center on Poverty and Inequality produced the California Poverty Measure, which provides similar detail for California. Both measures use the same underlying methodology to address the shortcomings I just described in the official poverty statistics. And I’d like to note that the creators of both measures are engaged in ongoing efforts to refine and improve the methodology, and for that reason—among others—their measures do not replace the official statistics but supplement them (hence the name of the Census measure).
Both the California Poverty Measure and Census’s Supplemental Measure account for the resources that families actually have to meet very basic needs and the actual costs of doing so. The California Poverty Measure finds that more Californians are poor than we thought, as of 2011. The California Poverty Measure estimate of 22 percent (or 8 million people) is higher than the official rate of 16.2 percent—this translates to an additional 2 million people in poverty. More people of all ages are poor under this new, better measure. Of particular interest is the child poverty rate, which is 25 percent, or 2 points higher in our measure. In other words, a quarter—or more than 2 million—of our children are poor.
These higher poverty rates stem from a combination of factors. Most important, the California Poverty Measure uses higher thresholds than the official poverty measure does—that is, a higher poverty line. This is because housing costs for the vast majority of Californians are significantly higher than what the federal poverty line accounts for. On average, a single parent with two kids needs $24,600 to be considered out of poverty and a four-person family needs $29,000 to be considered out of poverty under the California Poverty Measure. That’s about $6,000 above the federal poverty line, and about $4,000 more than a similar family would need to be above poverty level in other states under the Census Supplemental Measure. These higher costs of living explain in large part why California’s Supplemental Poverty Rate is higher than that of any other state in the country.
Cost of living differences also change the narrative about how poverty varies within California. As you can see from the map I’ve provided, in many ways our measure flips the official measure’s picture of poverty. The California Poverty Measure finds that coastal areas—where housing costs are generally higher—have among the highest poverty rates in the state, much higher than the official estimates. Our measure places inland areas like the Central Valley, where official poverty rates are typically the highest, in the middle to low range statewide. In some counties with relatively low costs of living, the California Poverty Measure estimates are lower than official poverty rates. In these areas, safety net benefits to low-income families more than offset the cost of living, driving down poverty rates. But the vast majority of Californians live in higher-cost counties, where safety net resources, despite playing an important role in family budgets, are not large enough to offset high costs of living.
The California Poverty Measure allows us to look closely at the role safety net programs play in mitigating poverty. And our research suggests that this role is powerful—especially for children. We find that without CalWORKs benefits the child poverty rate jumps 2.5 points—equivalent to about a quarter million more children in poverty. Similarly, without CalFresh benefits, the child poverty rate would jump 4 points—that is an additional 375,000 children. Of course, many families use both of these programs, as well as others that we’ve accounted for—including housing subsidies, SSI, school meals, and the EITC/CTC. When we look at the combined effect of all of these need-based safety net programs, we find that without them a stunningly high 39 percent—or 3.6 million—of California’s children would be poor. That is, the child poverty rate would jump nearly 14 points. This shows that low-income and poor families are making use of the social safety net and that it has a substantial effect on their poverty status.
These poverty-reducing effects could be even larger if changes were made to the safety net. For example, the USDA estimates that slightly more than half of eligible Californians participate in CalFresh—this is one of the lowest statewide participation rates in the nation. Participation also varies across California’s counties. This begs the question of how much lower poverty rates would be—would they still be the highest in the country?—if participation rates were higher. As this example shows, housing costs are not the only area in which California stands out. And, while policy clearly plays an important role in offsetting the higher cost of living in California (it more than offsets cost of living in families with children), it has the potential to move the needle on poverty even further.
As it stands, our estimates suggest that the safety net kept nearly 1.3 million children out of poverty in 2011. This matters a lot because research increasingly links poverty to adverse outcomes in many arenas—nutrition, health, education, even brain development—in addition to long-term economic opportunity and mobility. It’s my hope that our research can be used to inform the important decisions you make on policies that address family economic need and its consequences. Thank you for your time.
Despite California’s embrace of federal health care reform, millions of Californians are expected to remain uninsured even five years from now. Undocumented immigrants are likely to be a large share of this uninsured group because they are excluded from coverage under the Affordable Care Act. At the state level, legislation has been introduced (SB 1005) to provide subsidized insurance options for all low-income Californians, regardless of immigration status.
California is home to an estimated 2.5 million undocumented immigrants. This population is distributed unevenly around the state, but undocumented immigrants reside in nearly every county. Los Angeles and other Southern California counties have the largest number of undocumented immigrants—nearly a million are estimated to reside in Los Angeles County alone—and this region is projected to have more than 60 percent of uninsured Californians in 2019.
What do we know about how undocumented immigrants use health care today? The limited body of research on health care use among undocumented immigrants finds lower levels of utilization and spending relative to the native born. Despite their limited access to other health care settings, noncitizens are less likely to have recently visited the emergency room than citizens, even when demographic and health factors are taken into account. In part, this is because undocumented immigrants are relatively young and likely to be working, which suggests that they may be healthier than the general population. However, some of these immigrants—particularly farm workers—face heightened health risks.
Without changes in state or federal law, we can expect that undocumented immigrants will continue to rely on the health care safety net—particularly health clinics and hospital emergency departments. Some counties provide services to undocumented immigrants under their indigent care programs—particularly counties that operate public hospital systems— but the majority do not and are not required to do so. Recent PPIC research suggests that California’s network of clinics is well positioned to serve low-income communities, including those with large numbers of undocumented immigrants. About 75 percent of California’s undocumented immigrants live within two miles of a health clinic, although proximity and access varies across counties.
Comprehensive immigration reform at the federal level could improve insurance coverage and access to care in the long-run, but recent proposals have specifically excluded undocumented immigrants on a path to citizenship from federally subsidized coverage. It’s hard to imagine that changing anytime soon. That leaves it up to the state to grapple with health care access for this sizeable group of residents.
California’s health insurance exchange, Covered California, has enrolled more than 625,000 people under the Affordable Care Act. However, many eligible enrollees have yet to sign up, including a disproportionate share of Latinos. But if residents follow through on the intentions they express in PPIC Statewide Surveys, enrollment should continue to grow for all groups. This is significant because Covered California will need to enroll a broad group of eligible Californians—particularly the young and healthy—to keep premiums low in the future.
In PPIC’s January survey, 72 percent of the uninsured say they will obtain insurance in accordance with the law, up slightly from our December survey (66%). We then combined the two surveys and found that solid majorities of the uninsured in all demographic groups say they plan to sign up, with particularly high numbers in the following groups:
Poverty and income inequality have become hot topics in policy circles at the state and national levels. PPIC has been looking at these issues, too—recently analyzing the role that needs-based programs play in helping families make ends meet. In conjunction with researchers at the Stanford Center on Poverty and Inequality we measured poverty in California more comprehensively than the Census official poverty measure does. We found that the federal Earned Income Tax Credit (EITC) and refundable portion of the Child Tax Credit have the biggest impact in moderating poverty rates, relative to other safety net programs.
Both programs are aimed low- and moderate-income families with dependent children. Families must file tax returns to participate in these programs, which are funded by the federal government. (In addition, 25 states and the District of Columbia have their own smaller EITCs, although California does not.) 
The EITC is fully refundable, meaning that a family with earnings but no net tax obligation (after deductions) receives the full amount of the credit (based on their earnings) in the form of a tax refund. The Child Tax Credit is partially refundable.
Together, the EITC and CTC trimmed the 2011 poverty rate for working age adults from 24.0 percent to 21.4 percent. The child poverty rate dropped even more, from 31.1 percent to 25.1 percent. Put another way, an additional 600,000 California adults and 560,000 children would be considered poor without these programs.
