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OFFICE OF “The Honorable Donald 3. Tramp President of he United States ‘The White House 1600 Permwyleunia Avene, NW ‘Washington, D.C. 20500 ‘The Honorable Mitch MeCoanell Majority Tender United Staves Senate 317 Russell Office Bullding, Washington, D.C, 20810) ‘The omorable Charles 6. Schumer Minority Leader LLnited Statos Senate 322 Hurt Senate Offive Building Warhingum, DC. 20815 TUE GOVERNOR ‘The Honable Nancy Pelios ‘Speaker of he House LS, House of Represontatives 1236 TLongwerth Fouye Office Building Washington, 0.C. 20815 ‘hs Honorable Kevin MoCarthy Minority Tewee US. louse of Represeratives 242] Raybuin House Office Building ‘Washngton, D.C, 20515 January 7, 2019 Dear President Trump, Majority Tudor MeConnell, Minority Leader Schumer, Speaker Pelosi, and Minasity Teaer McCarthy Ou iuy first cay as the Governor ofthe State of California, | suite with a request: empower Slules like mine to design and implement truly transformative solutions for securing wfFortable ‘wealth cate tral ‘Historically, Califomia has le the nation in designing and sxceuting on innovateve policy solutions to help addresy our most pressing problems. Bur whic it comes to Real ears. California's spitit of innovation is stifled by federal Kons on how we ean inmavate aul experiment. Tinting luv permits only limiled, pievemen innovation —aot che comprehensive reform eves to sdeess the msviad challenyes tbat Cullniios dave when navigating taday”s health cre system. Califernra funilies continue to suugele with sisiag heslth care costs. For example, this year alone, some familie are expert 19 sce an averaus:9 percent rise in health care coets, COVERSSOR GIN SRWISCO © SACRAMER 2, CUE HE) 5841 accocding 0 Covered Calilmnia, We have taken action sad will roone to mke heath exe more affordable aud available forall Calfocoians Thavsover. ly adress this ongoing cas! ris in health cane in the mast effective way, we most eave Ue Federal wold ts suppent Cali ornia's uility lp prvide yuulity hewllheare For everyuns, financed through a single-payer model like Medicare. We ants have the lool wo innavale und cxpanl on the Affordable Care Act, eve as we build towards a more comprehensive, universal system that works tor patios, providers, aud taxpayers alike, {ask that you amend faseral law lp enable States us apply lor and reueive Tromsfarmatiomal Cis snd Universal Coverage Walvors, empowering California wo truly innovate and te hea ‘ansformativ: refous thet provide the path to single-payer health care system. 1 am cager co tales these shullengey head-on ind—toyether wilh my colleagues in the Legislature and with he Denefic ot tederal polices that raore fairly promate iinevation, quulity and eost-etVecliveness— fo creste an affordable, casysto-navigate health cave system forall Californians. ‘within existing federal lw, California has done what we can, and will continue ro do more. We Ihave mae tremendous progrens in wxpamaling heslth eae voveraye under the Affordable Care Act. Kor extunple, in the span of five yeurs, ve State's usinsured rake dropped fan 17 pores te ‘an hiscoric low of 7 percent ‘Our work, however, i fw fiom done, Despite the finsucial support provided by the Affordable Care Act our health care system ranaies loo expemsive mul io eamplex even ti Caiforminns viho have instance. High and rising health care coats mean workers wpe have re increased, tothecatont they should have, aud small businesses stmgple ta offer coverage to thelr employees. The ising canis are unsusfainahle and are exerting iramense pressure on the budgets ‘of Stale and loual yavernnaerly empl, anal limes Tn the absence of bolder transfonnation, the Affordable Care Act is a strong foundation to build fon: the goul of universal euverage: Une promive of simplicity and protecting those who ane sick or fneed care; lear Timits on health plan profits aul assuring premium dellas ure spen| um meee] caro; tsing competition to lower costs not only for Those ia California's markeyplace, but for alt the 2.4 million n fhe indiidyal market, We can aud muust build on thess clements a8 we go Tewari, In doing 20. we must crcate federal and State partuerships that support he positive tsunaforration of health esversgo andl care hropghaut aur country, We must rue awAy fom. rouking heullh var polteall and place our lweus ein meeting the nezus wFall Americans Building on the Affordable Care Act's solid foundation, | will tackle these challenges head-on. Tater this week, Twill submit « budget tothe Cogisletre that proposes to, among other things: + expand coverage and affordability for Calnfornians, including those ia the middle class who corently reecive ne fingnsial assistance: ‘+ Enact a state Individual Shared Responsibility Proving: ‘© Provide stale-bused supper! Jur our sounger undocumented Califimaisms; ‘© lmplement fixes to better manage care aad contain cuts: aru ‘© Addross rising preseription drug prices by counterbalancing te bargaining powcr of the Phurnuceutieul inelusty, However, in oider for California to achieve a uly comprehensive sclutie! to ezukiny health care ‘more affordable and accessibte to all, the federal goveuumenr must act As 1 explain below, the Federal government should provide for hransformaional waivers that empower States te 1ily ‘mmovate; build on ne mucoesses of Ure Atkrduhle Care Aetz and. wwii Further changes that rode the asits achleved in the past five yeats ‘Together, hese refboms woul cuable California and other States to nally achieve atfondable healthcare forall 1. Create New State Transtorn jonul Cost and Coverage Waivers “The elena yaveranent has given Slates the Neill te make inmentive changes in health eare thtongh dhe use of waivers. However, the exiting Stale mpvution Waiver i ts Timilea ta ciTeotively design and implement comprehensive solutions. Congressional leaders have rowugnized this fel, proposing legislation last year to expand States? waiver autheriey 9 promote lasivenul ever usthis spits the fodsval goverument shoold enact new law enabling Slates ts apply lr Trunsformaional Cost and Universal Covcrage Waivers to re-iavest federal tinding combined wilh Sluts Tunds—tr incrense coverige, contain costs and drive improvements in health care quality. Eesplaying such waivers, Stale could design and luilor Mheir own solutions, ual Tay the grounclvork for more comprehensive solutions, such as a single-payer system Under this upprouub, Staten wauld be able us apply te Reallocate funds to best mest the uoeds of all the State's population; Use public exchunyes as a plullinm for portable benefit, leveraging funding from bot employers and workers; ‘+ Assure competition by making public plu options available n axeos with limited health ‘© Support clear, continuous, and seamless coverage as residents move helween individual coverage, cmployer-basod insurance, Medicaid, and Medicare; The tals such ag all-puyer pricing i uddross riving health care costs; ‘Promote intprovements to how care is delivered, supperling care ewordinatiem and ppayanent systems that rewad better quality, + Inlegesteevlical public Heulth initiatives a the health vare delivery system Wo midds ‘emerging and ongoing threats to heath, teh as couditions precipilated hy vlirale change; ad + Funes locally michael progruzn thal ulowe health disparities nd ueldrese mfenying social determinants <i health Unlike che current stonclards tied to “budget neutrality,” this uow waiver would be fiscally aligned with the feders! goyerament’s youl of recucing the uninsured. Jowering wast. unt Jnnproving quality, The waivers sould serve as Ihe funding mechanism wailing Stites Tut wre relatively more sucessful in achieving these goals. For example, additional tading should be made available far States thac ate moss effoctive at lowering the rate of the cligible uninsured, ‘outaining costs effectively, sud promoting qualiy While California and after States Toul for ways tv improve upc the bealth coverage and core systems currently in place, we nead to preserve Uhe national staudards thot provide vita cousumcr support and protection, along with much needed acess to coverage std cars. Faleal ‘waivers should focus on meeting the explicit goal of driving positive ehamge in health cms, ‘whether through expunded coverage, inereosed quulity, of lesweted vost. ‘By empowering States and cing flexibility to postive outcomes. ‘Transformational Cost and Universal Covstage Waivers would enable States to finally enaet vemprehensive solutions to seuuring wflordibke heal care for ul 2. Build om the Sucecsses of the Affordable Care Act The Atfondable Care Act greatly increased the number of Americans with alfordahle heath overage hy expanding Medicaid, seuing alfonahility stars tor enplayer-sponsored overage, and extablishiag health benelit exchanges tasked with administering the Act's preminm tax credits and cost-sharing recuetions, Lc federal government should comtinuc to fimd an evolve those programs to ensure they continue to meet the needs ol American. Building ew the A Mirduble Cure Act should, arson other Things, include: + Reinstituting the Individual Suared Respousibility Payment to Prevent Coversge Tosses and Resulting Premium Tacreases, The Congressionat Budget Office pmjects thatthe cepeat ofthe individual mandate will increase the uninsured by 4 million n 2019 snd by 13 nulion in 2027, with individual matkot rts increasing by about W percent ip themext 1D yours relative ta whot they saul have heen with the presisien. The inulvidual manulue iy w winiet lective lool Wo ereale a vielous cle of strong eneollraent thar holds dawn anual sate increases ‘© Ensuring Affordable Health Insurance far Middle-Clase Americans Who Da Nat Receive Finanvial Help. Under tbe Affordable Care Act’s cument steuctue, consumers ‘who carn Less than 400 porcent ofthe federal poverty Level (FPL) are cligible for tax cralts that Tint the gost oftheir premiums ta ner mone thm 1? pervent al invome: Tloosever, Ga Financial help slaps ubmuplly when a cawumer eams more Ura 400 peroeat FPL, or move than $48,560. This means chat an individual who carus $49,000 a year has go protection from or assistance with premiums costs, This so-called tax ere “Clit disprepurtionatcly impacts der individuals and individuals who Tive im areas ol igh health coverage conta Mt Calfemia today, a couple in theis sixties making $70,000. ‘year may have to pay upwards of 20 perceut of thet invome fora plan. Premiums shauldl bo eappial lr al, insteud oC nly those Fung wre mn arirury Feira poverty evel. Ta Caifeta, this action senda benetit the approximately 1 milliou people rreming he fill ans wTeaverae today anu weil noentvize carverage take up among the ‘500.080 sniddle-class Californians who are piojected to be uninsuced in 2620. + Fxpanding Cost-Shaving Subsidies ta Rnsure Aecows ta Needed Care. The A fordahle Cre Act's cost-sharing reductcm program kuvets copayments and other out-olepacket costs based on income. For individuals befow 200 percent EPL (824,280), chis subsidy significantly boosts the value of covcrago, Kor sndividuals camming slighty wore memey, the vost-shying substly is minimal snd t phases oul eaurely ubave 250 pervenl FPT. ar above $30,350, Survey research showy Lal ever unig howe who receive significant hhelp, one quarter of enallees delay or avoid accessing care due o cost. ln Califeanis today, the average employersponsored plan covers more than ND peresat of the eost of care, By contrast, indivieual marker enrollees who chocge the lowest level af coverage hhave enly shout 60 percent of ther health care cos covered by their monthly premiums Extering eligibility for cost-sharing subsidies wo 400 peroeat FPL would support aa Additional 600,000 individnals in Califorva with help paying forthe care they need ‘+ Tmplementing 4 Reincurance Program that Will Reiluce Premiums by 10 Pereent. ‘The temporary federal reinsurance progean in place borwecn 2014 and 2016 lowered preminua costs by 10 percent or morc by fading health insurers far cert, fined high- ‘ost claims. 8 permenent national program should he estllished, fundest af the level seeded recuse ratew hy 10 percent, Yogsther. these improvements tothe Affordable Care Act would build om the successes of x proven model, 3. Avwid Further Prosion of Progress Equally important as building on the A erable Core Act ik uvoiding steps thal wuld elu us ta The day of skyrocketing individu market premviuren, jnnk belly ingueanece, and oilions lenied woverage becanse of thei health history. ‘Lhe promotion of alternutive bensfit plans, such ay shor/-term, Timiled-Gurulion imurance, wom ‘with significant drassbucks [or canwumers, ineluding those with pre-eaisting conditions. Such plans also fragment dhe individual market, cresting adverse selection and driving up premioms, ‘while we have taken action in Califomia to prohibit tae sale of short-trm. imited-dortion, inzuranes, comaomery in many other Ststes cou be denied caveraye ot be Tell with une vere ‘medicul hills ue us Tete cowerage, Plies such as these conusibute io rising healh care cost, rake meaningful coverage less affordable, and add pressure to our health care syste that will tipple across sectots, A comprehensive solution io aHferldble health care will voquice huh yisdhr anil wourags, with States and the federal govercmen! werkingstopether as partners, Fist aad foremost, Vask That ‘you amend federal law to enable Slates tw apply lor Translimmational Cost and Universal Coverage Waivers, empowering Catifornia to parse trenslirmutive heelth care reform, snch 984 ngle-puyer nystem. Further, ask that you bald on the progeess athe Adfordahle Cure At, especially by bolstering the ullordahility provisions of the