Newsom Stresses Need For New Federal Coronavirus Aid

California Governor Gavin Newsom unveiled a new $25 million lab last week that he says will double the state's capacity to test for COVID-19 and speed results to patients in less than two days.

The new lab in Valencia will be able to process up to 150,000 test kits daily. The governor's office says the facility will help handle an expected increase in tests as flu season approaches since COVID-19 and the flu have similar symptoms.

We spoke with Gov. Newsom about coronavirus testing in the state, and how his administration has handled the pandemic.

This conversation has been edited for clarity.

A lab technician conducts PCR testing on COVID-19 kits at the new state lab in Valencia. (Jackie Fortier/LAist)

COVID-19 tests offered by state and local governments are free to patients, but who actually pays for them?

Tests are not free; taxpayers are paying the cost in California. We've done 18.4 million tests at an average cost of $150 each. And primarily coming through our Medi-Cal system, meaning taxpayer dollars, Medicare, coming from insurance companies that pass those costs along to others, [like] employers. So people are paying for these. Even if you're not individually paying, someone else is.

It's beyond me that we would allow a system with no real competition, where some of these large for-profit labs have made an unprecedented amount of money. And yet we've done nothing to create more competition until today, where we are taking the average cost of $150, bringing it down by roughly one-fifth, and creating a competitive environment where people can continue to look for cheaper ways of providing [tests].

Federal legislation passed last spring known as the CARES Act requires health insurance companies to reimburse the state for some of the cost of COVID-19 tests, but that legislation ends in January. If Congress can't pass an extension, will California pick up the tab?

It's an extraordinary fact that that may indeed be the case. I was talking to Speaker Pelosi two days ago -- this is foundational in any deal that they advance with the new CARES Act. But in the absence of a new CARES Act, yeah, we would be forced to pick up those costs. No state has the capacity to do that.

The new lab in Valencia is part of a $100.2 million contract. How will California be reimbursed for its portion of the cost?

We put $100.2 million upfront in terms of the cost. And then once we are at a threshold pursuant to the contract, there'll be an additional $100 million contribution which will get reimbursed. Every test will set aside $5.51 until all the upfront costs are reimbursed.

This was done in partnership with the federal government and FEMA, 75% of the costs [borne by the federal government], 25% borne by the state. And with our ability to get reimbursed, we will actually not be out of pocket when we're operating this at scale, as we have a third party biller, Sutherland, that will bill the insurance companies and bill other employers directly to get the reimbursement related to the state costs of this facility.

What have you learned from this pandemic, politically?

I've tried not to take cheap shots on this pandemic. The Trump administration -- I mean, we've been at each other for years. But when it comes to this pandemic, I've been humbled by the fact that we didn't have 100 million masks in our storage facility. We had a bunch of ventilators that were broken, we had supply chain issues -- every governor did. And you know, we were so quick to take shots, but not take responsibility ourselves.

Your administration introduced a four tiered, color-coded reopening strategy based on the local outbreak level to try to avoid a statewide stay-at-home order. Currently, California's cases and hospitalizations are rising. Would you issue a stay-at-home order if we see cases surge?

If we get to South Dakota, North Dakota rates, that's a different conversation. This is a very dynamic disease. And what you're seeing across the country right now is really alarming.

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