Extending Covered California subsidies to DACA recipients would fill coverage gap for 40,000 Californians

Press Coverage

In April, the Biden Administration announced a proposed rule that would allow an estimated 40,000 uninsured DACA recipients in California access to subsidized health coverage through Covered California. This fills an important gap in health coverage options, but it renders access to Covered California contingent on DACA status—which itself is at risk of being overturned by the courts.

What is DACA?

Deferred Action for Childhood Arrivals, or DACA, is a program created by President Obama in 2012 that provides temporary and renewable work authorization and protection from deportation to undocumented residents who arrived in the U.S. as children and meet other eligibility criteria. According to the U.S. Citizenship and Immigration Services (USCIS) there were 165,000 California residents with DACA at the end of 2022, out of a total of 580,000 nationwide. The program does not provide a path to citizenship, but confers many benefits to both recipients and communities: better job opportunities that lead to better pay and benefits, improved mental health, and the ability to travel internationally with prior approval, among other benefits. Currently DACA recipients can apply for renewal, but new applications for DACA are not being processed by USCIS due to ongoing litigation.

How does DACA affect health insurance eligibility in California?

Californians with DACA may be eligible for and enroll in insurance through their or a family member’s employer. Low-income Californians with DACA have been eligible for Medi-Cal since the creation of the DACA program under a long-standing state policy that makes low-income immigrants with “deferred action status” –including but not limited to DACA recipients—eligible for Medi-Cal.

Under federal policy, only citizens and lawfully present immigrants are eligible to purchase health care coverage and receive subsidies through Affordable Care Act (ACA) health care marketplaces like Covered California. Under previous rulemaking by the Obama Administration, DACA recipients were explicitly made ineligible for ACA marketplaces. (DACA recipients, and anyone regardless of immigration status, can purchase unsubsidized coverage directly from an insurer.) This exclusion was implemented in the form of an exception to the ACA regulations’ definition of “lawfully present,” which acknowledges that individuals who received deferred action outside of DACA are lawfully present. The Biden Administration’s proposed rule would include DACA recipients in the category of “lawfully present” immigrants who are allowed to enroll through the federal or state marketplaces and to receive subsidized coverage, just like other immigrants who are “lawfully present” such as refugees and asylees.

How many Californians will this change affect?

Using our California Simulation of Insurance Markets model (CalSIM), we projected who will be uninsured after California implements the expansion of Medi-Cal benefits to all low-income Californians regardless of immigration status in 2024.[1] In the absence of the proposed federal change for DACA recipients, there would be 520,000 uninsured Californians who earn too much to qualify for Medi-Cal, don’t have an affordable offer of employer coverage, and are excluded from Covered California due to immigration status.

Our rough estimate is that approximately 40,000 of these uninsured Californians will be uninsured DACA recipients who would now qualify for subsidies through Covered California.[2] About 30,000 otherwise uninsured DACA recipients would newly enroll in coverage as a result of this change, assuming take-up rates of subsidized coverage among DACA recipients were similar to those in the general population of Californians.[3] Subsidized coverage through Covered California would act as an important safety net for DACA recipients, as it does for citizens and other lawfully present Californians, helping to eliminate gaps in health insurance coverage as people’s earnings increase above the Medi-Cal threshold and as they move between jobs.

What’s next?

Comments on the proposed federal rule change are due June 23, 2023. If finalized, the proposed federal rule change would provide tens of thousands of California residents with DACA the ability to access more affordable health insurance. This is an important step, but it renders access to Covered California contingent on DACA status—which itself is at risk of being overturned by the courts.

California policymakers are considering legislation (AB 4) that would direct Covered California to apply for a federal waiver to allow access to undocumented residents. Both Colorado and Washington have made progress in providing access to state health insurance marketplaces for undocumented residents. If policymakers expand access to Covered California and ultimately pair access with state affordability assistance, the state would ensure that hundreds of thousands of California immigrants who are currently excluded have access to affordable health insurance, whether or not they have DACA.

Endnotes

[1] Undocumented residents are excluded from full Medicaid benefits under federal law. However, over the last decade California has expanded Medi-Cal to include groups of low-income undocumented residents in full-scope coverage. Medi-Cal was expanded to undocumented California residents starting with children in 2016, young adults up to age 25 in 2020, and older adults age 50 and over starting in 2022; starting in 2024 all age groups will be covered.

[2] Our overall estimate of the uninsured rate for all undocumented California residents under age 65 in 2024 after Medi-Cal expansion is 27%. Since Medi-Cal take up is very high among all eligible Californians, including undocumented residents, we assume that almost all of the DACA recipients who are uninsured would be eligible for Covered California. Applying this 27% rate to the 165,000 DACA recipients results in our estimate of approximately 40,000 uninsured DACA recipients who would be eligible for Covered California.

Extrapolating from surveys of DACA recipients, we assume they are more likely than undocumented residents without work authorization to have income above the Medi-Cal threshold, a group for which the uninsured rate is higher. We similarly assume that since DACA recipients have work authorization they are more likely than undocumented residents to have employer sponsored insurance. If these two differences canceled each other out, the 27% uninsured rate would apply equally to DACA recipients and undocumented residents without work authorization.

[3] This estimate is in line with federal projections that 116,000 DACA recipients nationwide would newly enroll in marketplace or basic health plan coverage; California accounts for just over a quarter of all DACA recipients, or approximately 30,000 projected new enrollees.