By Jane Anderson

California created its own state-based individual mandate, added help for middle-income consumers purchasing coverage on the individual market, and agreed to pay for Medi-Cal coverage for undocumented young adults in a $213 billion legislative budget deal.

In the budget pact, approved June 13, California became the first state in the nation to offer subsidies for health coverage for those between 400% and 600% of the federal poverty level.

The penalties paid by those who fail to purchase qualifying health insurance will help pay for those subsidies, according to the state. Beginning in 2020, adults will be charged $695 or 2% of their household income, whichever is more, for failing to purchase health insurance.

The legislation also expands Medi- Cal coverage to undocumented young adults ages 19 through 25 at the state’s expense, which will add approximately 90,000 young adults to the Medicaid program at a cost of around $98 million per year.

“We think for the long-term health of the exchange, having a mandate will help to get lower-risk people into the exchange,” L.A. Care Health Plan CEO John Baackes says. “It also gets the younger cohort used to participating and getting access to care whenever they need it.”

The budget deal left two other top issues for health insurers — a tax on managed care organizations and a new statewide drug purchasing plan — unresolved.