Resistance State: California in the Age of Trump

State Senate President Pro Tem Kevin de León is proposing an end run for Californians to deduct the full value of their state and local taxes from their federal tax bills.

De León, a Los Angeles Democrat who is running for U.S. Senate, introduced SB 227, which would allow taxpayers to make charitable deductions to the state and receive a dollar-for-dollar tax credit on the full amount of their contribution.

Because charitable contributions are fully deductible, this would allow California taxpayers to sidestep the new $10,000 federal cap on state and local tax deductions.

“The Republican tax plan gives corporations and hedge-fund managers a trillion-dollar tax cut and expects California taxpayers to foot the bill,” de León said in announcing his legislation. “We won’t allow California residents to be the casualty of this disastrous tax scheme.” He noted that the bill is modeled after existing laws that provide tax credits on charitable donations made to state college affordability grants, such as the Cal Grant program.

His Republican counterparts are instead calling for a lowering California’s personal income tax rates.

Vince Fong on Twitter

Announcing my state tax cut proposal for CA middle class families and small businesses! This lowers the state’s tax burden without gimmicks. https://t.co/htdMGUsRfZ

A day after Gov. Jerry Brown agreed to the Trump administration’s request to beef up the National Guard in states along the Mexico border, fellow Democrat Lt. Gov. Gavin Newsom said he would not have made the same decision as governor.

But Newsom, who is the front-runner in the race to replace Brown as governor, put a large asterisk on his disagreement with Brown:

Brown announced Wednesday that he would accept federal funding to add 400 California National Guard members “to combat transnational crime.” But he laid out a long list of conditions in an agreement with federal authorities: The troops will not build a border wall or enforce immigration laws, and the arrangement is approved only until Sept. 30. Brown also specified that when it comes to the state’s National Guard, he is the “commander in chief.”

America’s Commander in Chief responded Thursday on Twitter: “Thank you Jerry, good move for the safety of our Country!”

California Attorney General Xavier Becerra moved today to intervene in a Texas lawsuit aimed at undoing Obamacare. Becerra and 15 other attorneys general joined forces to file their motion to prevent “immediate and irreparable harm,” as Becerra put it, to California and other states.

At stake is an estimated $160 billion in federal dollars for California’s health care system, with a combined potential loss of about $500 billion for 15 states and the District of Columbia, according to Becerra. The Trump administration and the Republican-controlled Congress repeatedly have tried to unravel or eliminate Obamacare, with mixed results.

“The Affordable Care Act changed the world,” Becerra said. “We can’t and we won’t go back.”

He pointed out that roughly 5 million people were signed to insurance coverage in California through Obamacare, under the Covered California exchange and the state’s expansion of Medi-Cal ranks. Before Obamacare, he also noted, many health conditions weren’t covered even if patients had insurance, and some patients were denied care based on pre-existing conditions. But all of that changed under the Affordable Care Act.

If Obamacare is overturned, the federal dollars that go with it will evaporate. That includes subsidies for insurance bought through the Covered California exchange, and a large share of the cost for California’s Medi-Cal expansion.

The 16 Democratic attorneys general hope to be allowed to participate fully in the court debate, which affects states outside of Texas.

California Attorney General Xavier Becerra

“Striking down the Affordable Care Act would cause immediate and irreparable harm to California and the nation,” Becerra said. “If this lawsuit goes forward, it will cause chaos. It’s our intent to protect families in California.”

Texas et al. v. United States et al. argues the Affordable Care Act is no longer valid because the recent tax overhaul by Congress eliminated the requirement that individuals have health insurance or pay a fine. Without that penalty, Obamacare no longer includes a tax imposed by Congress, and that spells the end of it, according to the lawsuit.

“Once the heart of the ACA—the individual mandate—is declared unconstitutional,” the Texas complaint says, “the remainder of the ACA must also fall.”

“The repeal of the Affordable Care Act would have devastating consequences for California and the nation,” said Gerald Kominski, director of the UCLA Center for Health Policy Research. “The (Texas) lawsuit seems frivolous, because Congress modifies existing law all the time, but that does not invalidate the original law being modified.”

Becerra noted that the ACA’s constitutionality already has been upheld by the U.S. Supreme Court.

The other attorneys general joining the motion to intervene are from Connecticut, Delaware, Hawaii, Illinois, Kentucky, Massachusetts, North Carolina, New Jersey, New York, Oregon, Rhode Island, Virginia, Vermont, Washington and the District of Columbia.

Since the Trump administration said in January that states could require Medicaid recipients to work if they want to continue receiving the benefit, three states have signed on: Kentucky, Indiana and Arkansas. Many others are considering it.

California, of course, is walking a different path. State Sen. Ed Hernandez (D-West Covina) is floating a bill to ban work requirements for Medi-Cal recipients. Medicaid is the national health care program for the poor; the California version of it is Medi-Cal.

Hernandez called the federal work-requirement idea “backwards” when introducing his bill. “Now is the time to focus all efforts on covering more people,” he said, “not less.”

Proponents of the work requirement say it can save money and make recipients accountable for receiving benefits. The whole point of requiring work for non-disabled adults, according to federal guidance, is to promote recipients’ well-being and increase their self-sufficiency.

Critics argue it won’t reach any of those goals and, in fact, might actually cost states money. Erecting a work wall, they say, also would discourage people from getting Medicaid and drop many people who need it.  

 “I’m not sure why adding a work requirement would promote well-being,” said Nadereh Pourat, director of research at the UCLA Center for Health Policy Research. “The reality is, the great majority of Medicaid recipients are children or seniors—or they’re part of working families. We can’t assume people who get Medicaid are just sitting on their hands.”

In California, most of the working-age poor on Medi-Cal already do have jobs. According to a California HealthCare Foundation report based on 2016 data, children and seniors make up the vast majority of Medi-Cal recipients. Only about a third are working-age, non-disabled adults.

The majority of those adults, 62% of them, work. Among those not working, almost all (82%) were ill, caring for an ailing family member or going to school.

Who’s left? The report said 324,000 Californians who didn’t work and were eligible to work were receiving Medi-Cal benefits. That’s about 2.4% of the 13.5 million on Medi-Cal.

If a work requirement would lift those people out of poverty and off Medi-Cal, that would save the state money, right?

That’s a pipe dream, according to Anthony Wright, executive director of the Sacramento-based Health Access, a nonprofit health advocacy group. Wright said a work requirement won’t make jobs appear.

The real way the work-for-Medicaid plan saves money is by cutting back on the number of people who receive benefits, he said. Imposing a lot more paperwork and eligibility requirements would do the trick, he said.

“This will have an impact because of the paperwork and administrative barriers being put up to get coverage. People will fall off coverage as a result,” Wright said. “That’s the hidden agenda.

“Those [work-for-Medicaid] rules would marginalize Medi-Cal as a welfare program, rather than see it as a safety net for all of us,” he said.

The Hernandez bill doesn’t defy federal guidance the same way California’s cannabis and sanctuary laws do—adoption of a Medicaid work requirement is a choice. But it sends a message.

Hernandez has said he’s hoping other states might follow California’s lead. And resistance did crop up in Minnesota, where one legislator sent a message similar to California’s:

Democratic Sen. Tony Lourey recently proposed an amendment to a Republican-backed work-for-Medicaid measure in Minnesota, one that the GOP-controlled Legislature there quickly voted down. It would have required that lawmakers lose their state-funded health care benefits unless they work with some of the people affected by the legislation.

That is, the amendment said legislators must put in some time at, say, the county human services agency when the Legislature was not in session, or they’d lose their state health coverage.

The California bill already has passed the Senate Health committee, which Hernandez chairs, and has been given priority status by the influential Latino caucus. It has no organized opposition and is expected to sail through the Legislature.