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Editorial Stop hoarding state health insurance fines – InsuranceNewsNet

But as long as those who don’t want to buy insurance have to pay the piper, you’d at least hope that the money they contribute to the coffers goes to some good cause.

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Instead, a new investigation by nonprofit organization Kaiser Health News discovered, after three years, “the state did not distribute any of the revenue it collected, KHN learned — money that was meant to help Californians struggling to pay for coverage.”

And, the journalists report, as expected, “so far, the majority of Californians paying the tax penalty for not having insurance are low- and middle-income earners, according to state tax officials — just the people the money was meant to help.”

“It’s worrying,” says Diana Douglas, a lobbyist with Health Access California, who advocated for the mandate. “The whole idea was if we’re going to raise money from people who can’t afford coverage, to use that revenue to help people afford it and actually get care. It’s not fair to people who can’t afford it.”

It is true.

We are not talking about small amounts of money here either. Government officials estimated that in the opening period 2020-2022 approx $1.3 billion would have been collected in fines.

But Gov. Gavin Newsom argues that rather than spending the money in the here and now, the state should hold on to it in case Californians need help paying for health insurance in the future.

“The recent downturn in state tax revenue underscores the importance of setting aside those funds,” Newsom spokesman Alex Stack said.

Governor, Californians in need are in need right now – with inflation soaring, with health insurance costs projected to rise 5.6% this year.

It’s somehow especially troubling to withhold the money simply because an executive branch and a legislature with a penchant for big spending suddenly has to tighten its belt because their reliance on income taxes from tech millionaires and billionaires is likely to decline given the possibility of recession and the big hits delivered to silicon valley share prices, along with the layoffs across that entire sector here and in the Bay Area.

A bill this year by state Sen. Richard PanD-Sacramento, who is leaving office due to term limits, sought to tilt state fines in Covered California to reduce out-of-pocket costs for some consumers, including scrapping their deductibles. But Newsom vetoed the bill, arguing that the money may be needed in future years to restore the state-based subsidies,” reports KHN.

“Having insurance means nothing if you can’t afford the deductible, and that’s a huge barrier for people with chronic illnesses who have very high health care costs,” Pan said. “People still can’t afford to go to the doctor.”

With Pan soon gone, another lawmaker should immediately take up the matter during the next session. There is simply no reason to see these medically based penalties go into the state’s general fund when Californians need help with medical insurance costs right now.

Sacramento must either use the penalty properly or get rid of it altogether.

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