Report: California tries to balance budget on the backs of Health Care Workers: Minimum Wage Delayed Again
Report: Hike in California Health Care Minimum Wage Delayed Again to Oct. 15 - Times of San Diego
Summary
1. California's plan to increase the minimum wage for healthcare workers to $25/hour has been delayed.
2. The wage increase was originally set to begin on June 1, 2024, but may be postponed to October 15 or January 1, 2025, depending on state revenue.
3. The delay is part of efforts to address California's $46.8 billion budget deficit.
4. The wage increase would affect about 426,000 healthcare workers and could cost the state around $2-4 billion annually.
5. Some healthcare providers have already started implementing wage increases to remain competitive.
6. California is expanding Medi-Cal (the state's Medicaid program) to cover over 700,000 low-income immigrants living in the state illegally, starting January 1, 2024.
7. This Medi-Cal expansion is expected to cost the state about $3.1 billion per year.
8. The expansion faces challenges, including the state's current $68 billion budget deficit and concerns about straining the healthcare system.
9. Advocates argue that providing preventive care will save money in the long run by reducing expensive emergency room visits.
10. There are ongoing efforts to achieve universal healthcare coverage in California, with some additional legislation pending.
This summary captures the main points about healthcare wage increases and coverage expansion in California, along with the associated budgetary and implementation challenges.
Democrats in California have agreed to delay a minimum wage increase for about 426,000 health care workers to help balance the state’s budget.
The agreement between Gov. Gavin Newsom and legislative leaders is part of a larger plan to close an estimated $46.8 billion shortfall — the second year in a row the nation’s most populous state has had a multibillion-dollar deficit.
Health care workers were supposed to get a raise July 1, part of a plan to gradually increase their pay to $25 per hour over the next decade. Now, if approved by the Legislature next week, they could get that raise Oct. 15 — but only if California’s revenues between July and September are at least 3% higher than what officials have estimated.
If that doesn’t happen, the raise won’t start until Jan. 1 at the latest.
The delay preserves a hard-fought victory for one of the state’s largest labor unions — and one of Democrats’ largest campaign donors. Dave Regan, president of Service Employees International Union-United Healthcare Workers West, said workers are disappointed they won’t get raises this summer.
“But we also recognize and appreciate that legislative leaders and the Governor listened to us as we mobilized and spoke out this year to insist that, despite a historic budget deficit, California’s patient care and healthcare workforce crisis must be addressed,” he said in a statement.
The minimum wage for most people in California is $16 per hour, which is already among the highest in the nation. The minimum wage for most fast food workers in the state is $20 per hour, an increase that began in April and has had ripple effects statewide.
But increasing wages for health care workers is trickier because of the budget impact budget. California employs some health care workers, and it also pays for medical benefits through the state’s Medicaid program.
The Newsom administration had previously said the minimum wage increase would cost the state about $2 billion. But if delayed until January, it will cost the general fund about $600 million — a figure that would rise yearly to reflect scheduled increases until it reaches $25 per hour for most health care workers.
California’s revenues, while declining for much of the past two years, have rebounded recently.
“We are confident that the initial raise for workers who have not yet received it will happen in the Fall,” Regan said.
In total, the budget agreement would approve $297.9 billion in spending over the next fiscal year that begins on July 1. Newsom and legislative leaders agreed to $16 billion in cuts, including $110 million to a program that helps students from middle-class families pay for college and $1.1 billion across various affordable housing programs.
But Newsom and lawmakers agreed to abandon some previously proposed cuts, including one that would have stopped paying for people to care for some low-income disabled immigrants who are on Medicaid.
Lawmakers agreed to lend $400 million to the utility Pacific Gas & Electric to help extend the life of the state’s only remaining nuclear power plant — money that some lawmakers had opposed because they were worried it might not ever be paid back.
And Newsom agreed to increase how much the state’s Medicaid program pays doctors to treat patients — although the amount is far less than he previously agreed to spend. Meanwhile, doctors have qualified a measure for the November ballot that would force the state to pay them more for treating Medicaid patients.
In addition to a nearly 8% cut across the board for state agencies, the agreement includes an additional $350 million cut for state prisons. It also includes a temporary tax hike — starting this year and running through 2026 — on businesses with more than $1 million in taxable income.
“This agreement sets the state on a path for long-term fiscal stability — addressing the current shortfall and strengthening budget resilience down the road,” Newsom said.
Lawmakers are likely to vote on the budget next week. Republicans, who don’t control enough seats to influence legislation, say they were left out of the negotiations.
Senate President Pro Tempore Mike McGuire said it has been a “tough budget year” but elected officials were able “to shrink the shortfall, protect our progress, and maintain responsible reserves.”
Democratic Assembly Speaker Robert Rivas said the Assembly “fought hard to protect the public services that matter most to Californians.”
California promised a higher minimum wage for health care workers. Will Newsom delay it?
In summary
A higher minimum wage for health care workers that Gov. Gavin Newsom signed into law is set to take effect in two weeks, but he is racing to delay it because of its potential impact on the state budget deficit.
Update: California lawmakers on Monday announced they are pursuing legislation to postpone the health worker minimum wage law by one month to July 1.
According to the office of Sen. Maria Elena Durazo, who authored the law, the proposed delay aligns the law to the state fiscal year and gives legislators and the Newsom administration time to continue discussions about tying health care wage increases to California budget conditions.
Gov. Gavin Newsom is cutting it close. He signed a law last fall that phases in a $25 minimum wage for California’s lowest-paid health care workers beginning June 1. Then, he said he wanted to delay it because of its potential to exacerbate the severe state budget shortfall.
But two weeks before the deadline for employers to start paying more to their employees, many health workers are still waiting to hear whether they will in fact see a raise.
Some health workers remain hopeful. Others have already been notified by their employers of their upcoming raise or have already started to see increased pay.
When Newsom presented his latest budget proposal last week, the governor said negotiations around potential changes to the health worker minimum wage law, Senate Bill 525, are still taking place. He promised a deal between his administration, the Legislature and proponents of the law would be hashed out in the upcoming weeks.
“This budget will not be signed without that deal that we committed to being addressed,” Newsom said. He usually signs a budget for the next fiscal year in late June.
Meanwhile the union that advocated for the health care pay increase has launched an advertising campaign that aims to hold Newsom to the law he signed.
One ad by Service Employees International Union-United Healthcare Workers West on the social media site X shows a dialysis worker named Alice and it reads, “The dialysis care Alice provides is lifesaving. Yet, with caregivers at her facility starting out at only $18/hr, it’s no wonder there’s a short staffing crisis.
A $25/hr minimum wage for healthcare workers will help ensure patients get the care they need.”
Nathan Selzer, communications director for SEIU-UHW, said his union posted the messages because, “Our workers were concerned and remain concerned. What we saw in conversations earlier this year was folks really focusing only on money and only on dollars and cents, and not on what those dollars and cents are used for.”
SEIU-UHW is an affiliate of SEIU California, which sponsored the law.
“We made a decision that we’ve got to make sure we’re reminding people why this was made into law to begin with,” he said.
Selzer said he is not directly involved in conversations with the governor’s office and legislators, but that confusion among many workers rings true. “We’ve heard June 1, we’ve heard July 1. It remains to be seen what actually happens here,” he said.
Deadline to postpone minimum wage hike
What exactly is holding up the negotiations is unclear. Lawmakers and Newsom would have to pass and sign legislation that would push back the start date within two weeks to delay it effectively.
Newsom said he wanted to postpone the wage increase when he released his initial budget proposal in January. He asked the Legislature for an annual “trigger” that would tie the minimum wage increases to the state’s budget outlook. His administration projects the state is facing a $27.6 billion deficit in 2024-25.
The state has estimated the minimum wage increase could cost the state around $4 billion a year. That’s because the state would have to pay for the wage increases for its own employees at state health facilities and because the state may be forced to increase what it reimburses facilities for services provided to patients on Medi-Cal, its insurance program for low-income people, as a way to partially cover the pay raises.
The UC Berkeley Labor Center estimates the cost to the state to be much lower. Total health spending in California would increase by about $2.7 billion because of the law, but the state would be responsible only for a fraction of that, according to the Labor Center’s analysis.
Laurel Lucia, director of the Health Care Program at the Labor Center, said that there is no requirement in the law that directs the state to raise Medi-Cal payments to hospitals and clinics as a way to make up for the costs of higher wages, but the law could play a role in Medi-Cal rate negotiations.
“When the rates were set for 2024, there was recognition in the (rates) report that there might need to be changes to those rates due to” the minimum wage increase, Lucia said.
California hospitals, dialysis clinics raising pay
Absent any confirmed changes to the law, some employers and associations representing health employers say they are moving forward with the raises as scheduled.
“As far as we know, the minimum wage for health care workers will be going up as of June 1. We have no information that would indicate otherwise,” Jan Emerson-Shea, a spokesperson for the California Hospitals Association, said in an email this week.
The California Kidney Care Alliance, a trade association representing dialysis providers and clinics, said members are following the wage requirements as laid out by the law. “In fact, many providers have already increased wages well ahead of the requirements of the bill,” Jaycob Bytel, a spokesperson for the alliance, said in a statement.
Depending on where they work, employees are scheduled to receive from $18 to $23 an hour starting next month. That’s compared to the current statewide minimum wage of $16.
The wage hike will phase in over the years until workers reach $25 an hour.
Some health systems have already notified employees of the upcoming pay boost, including the University of California Health system. In a post on its website, UC Health said it would be moving forward with their scheduled wage hike of $23 an hour “meeting the most ambitious timeline” of June 1.
Meanwhile, some hospitals have already raised wages because of competition in the labor market. As an independent hospital that serves a high rate of low-income Medi-Cal patients, the wage law requires Kaweah Health Medical Center in Visalia to raise wages starting at $18 an hour.
“We are already seeing competitive changes in the market that have forced us to implement pay increases now, so we have not waited for June 1st,” Gary Herbst, chief executive of Kaweah Health, said in an email. “We are exceeding the state required $18 to remain competitive, and to continue recruiting and retaining great employees.”
Herbst said he rolled out increases beginning in February, and “will continue to evaluate it as time goes on.” He expects the law to cost his hospital about $30 million a year.
More than 700,000 immigrants living illegally in California will gain access to free health care starting Monday under one of the state's most ambitious coverage expansions in a decade.
It's an effort that will eventually cost the state about $3.1 billion per year and inches California closer to Democrats' goal of providing universal health care to its roughly 39 million residents.
Democratic Gov. Gavin Newsom and lawmakers agreed in 2022 to provide health care access to all low-income adults regardless of their immigration status through the state's Medicaid program, known as Medi-Cal.
California is the most populous state to guarantee such coverage, though Oregon began doing so in July.
Newsom called the expansion "a transformative step towards strengthening the health care system for all Californians" when he proposed the changes two years ago.
Newsom made the commitment when the state had the largest budget surplus in its history. But as the program kicks off next week, California faces a record $68 billion budget deficit, raising questions and concerns about the economic ramifications of the expansion.
"Regardless of what your position is on this, it doesn't make sense for us to be adding to our deficit," said Republican Sen. Roger Niello, the vice-chair of the Senate Budget and Fiscal Review Committee.
Immigration and health care advocates, who spent more than a decade fighting for the changes, have said the expanded coverage will close a gap in health care access and save the state money in the long run. Those who live in the state illegally often delay or avoid care because they aren't eligible for most coverage, making it more expensive to treat them when they end up in emergency rooms.
"It's a win-win, because it allows us to provide comprehensive care and we believe this will help keep our communities healthier," said Dr. Efrain Talamantes, chief operating officer at AltaMed in Los Angeles, the largest federally qualified health center in California.
The update will be California's largest health care expansion since the 2014 implementation of former President Barack Obama's Affordable Care Act, which allowed states to include adults who fall below 138% of the federal poverty level in their Medicaid programs. California's uninsured rate dropped from about 17% to 7%.
But a large chunk of the population was left out: adults living in the United States without legal permission. They are not eligible for most public benefit programs, even though many have jobs and pay taxes.
Some states have used their tax dollars to cover a portion of health care expenses for some low-income immigrants. California first extended health care benefits to low-income children without legal status in 2015 and later added the benefits for young adults and people over the age of 50.
Now the last remaining group, adults ages 26-49, will be eligible for the state's Medicaid program.
The state doesn't know exactly how many people will enroll through the expansion, but state officials said more than 700,000 people will gain full health coverage allowing them to access preventative care and other treatment. That's larger than the entire Medicaid population of several states.
"We've had this asterisk based on immigration status," said Anthony Wright, executive director of Health Access California, a consumer advocacy group. "Just from the numbers point of view, this is a big deal."
Republicans and other conservative groups worry the new expansion will further strain the overloaded health care system and blasted the cost of the expansion.
State officials estimated the expansion will cost $1.2 billion the first six months and $3.1 billion annually thereafter from the budget. Spending for the Medi-Cal program, which is now about $37 billion annually, is the second-largest expense in the California budget, according to an analysis by the nonpartisan Legislative Analyst's Office.
Earlier this month, the state Department of Finance sent a letter urging state agencies to cut costs in light of the deficit. It has not given specific directions about the Medicaid expansion, state officials told The Associated Press in December.
California's expansion of Medicaid will face other challenges. The state is chugging through a review of Medicaid enrollees' eligibility for the first time in more than three years that was prompted by the end of some federal pandemic policies. Many immigrants who had their coverage protected during the COVID-19 pandemic now find themselves ineligible because they no longer financially qualify.
John Baackes, CEO of L.A. Care Health Plan, the state's largest Medi-Cal plan with nearly 2.6 million members, said roughly 20,000 members have lost their Medicaid coverage during the review process this past year and are looking to secure new insurance plans. His organization is juggling to help people navigate through both processes.
"People are being bombarded with information," Baackes said. "I can't imagine if somebody were having to maneuver through all this, why they wouldn't be terribly confused."
"The phones are ringing off the walls," he said.
Fear and distrust are also barriers for the expansion, said Sarah Dar, policy director for the California Immigrant Policy Center.
Many immigrants avoid accepting any public programs or benefits out of fear it will eventually prevent them from gaining legal status under the "public charge" rule. The federal law requires those seeking to become permanent residents or gain legal status to prove they will not be a burden to the U.S., or a "public charge." The rule no longer considers Medicaid as a factor under President Joe Biden's administration, but the fear remains, she said.
More resources and effort are required to reach this population "because of the history of just being completely excluded and not interfacing with the health care system or with government programs at all for so long," Dar said.
California has more work to do to see the state's uninsured rate hit zero, known as "universal coverage," Dar said.
For one thing, immigrants living in the U.S. without legal permission are still not eligible to purchase insurance from Covered California, the state-run exchange offering steep discounts for people who meet certain income requirements. A bill pending in the state Legislature, supported by the California Immigrant Policy Center, would change that.
"It's going to be another really big undertaking," Dar said. "And we know that revenues are down ... but it's our job to make the case that, in times of economic downturn and whatnot, these are the communities that need the support the most."
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