California aims to maximize health insurance benefits for workers during labor disputes
This spring, Chevron workers testified that the company canceled health coverage for hundreds of United Steelworkers Local 5 members at its Richmond, California, refinery during a strike that ultimately lasted two months. Thousands of nurses at Stanford Health Care were told in April that they would lose their health insurance if they did not return to work during their week-long strike. More than 300 workers at Sequoia Hospital in Redwood City received a similar message after striking in mid-July as contract negotiations stalled.
Freezing health insurance benefits is a common tactic in a labor dispute because without it, it can be easy to persuade workers to concede to management’s demands. But California lawmakers are giving an advantage to strikers.
Assemblyman Jim Wood, a Democrat, hopes a new California law enacted will discourage employers from cutting health benefits during labor disputes by allowing private workers to double state subsidies for coverage purchased through Covered California, the state’s health insurance marketplace. The bill, which goes into effect in July, was sponsored by the California Labor Union, the California Teamsters Public Affairs Council and the Los Angeles County Labor Union.
“The point of the legislation is to say, ‘No, you can’t do that,'” Wood said. “Don’t try that again.”
According to Covered California spokesperson Kelly Green, premiums will be covered for eligible workers as if their incomes were slightly above the Medicaid eligibility level. The state will factor in the federal worker benefit and cover the difference. For example, one person earning $54,360 per year might pay 8.5% of their income, or about $385 per month, in insurance premiums under a mid-tier health plan. Under the new law for striking workers, that person who chooses the same plan will pay nothing in insurance premiums—as if that person earns $20,385 a year—for the duration of the strike.
The federal government authorized an enhanced benefit under the American Rescue Plan Act. The enhanced subsidy will continue until 2025 under the Inflation Reduction Act. The state’s share of the subsidy can increase once the federal subsidy ends.
One estimate unionized with the state suggested the law would cost California an average of $341 per month per worker—with strikes lasting one to two months. Labor groups estimate that the bill will affect fewer than 5,000 workers a year. California has approximately 15 million private sector workers, and strikes are generally a tool of last resort in labor negotiations.
It is not clear how the companies will respond. Chevron, Stanford Health Care and Sequoia Hospital operator Dignity Health did not respond to requests for comment. The bill has not met formal opposition from corporations or taxpayer groups. Covered California subsidies are backed by a mix of federal and state funds as part of the Affordable Care Act, so there is no direct cost to businesses.
Last year, Democratic Gov. Gavin Newsom signed into law the Public Employees Health Protection Act, which bars public employers from ending health coverage during an authorized strike. The new law for the private sector is different: There is no prohibition – or monetary penalty – for canceling health benefits during strikes.
Nationally, Democrats in the House and Senate have pushed for an outright ban on the practice, but no bill has advanced out of committee.
When California workers lose employer-sponsored health benefits, they may become eligible for the state’s Medicaid program, known as Medi-Cal, or become eligible to purchase health insurance through Covered California. With the latter option, workers can take out a range of subsidies to help pay their monthly premiums. In general, the lower the family income, the higher the subsidy.
But even when workers qualify for Covered California, that insurance can be much more expensive than the plans they have through their employment—sometimes eating up 30% to 40% of their income, proponents said. And striking workers may face delays because coverage may not take effect until the following month.
“This is one of the drawbacks of having a health care system tied to employment,” said Laurel Lucia, director of the healthcare program at the University of California, Berkeley’s Job Center. “We’ve seen during the pandemic, when there have been furloughs or layoffs, people lost job-based coverage when they needed it most.”
The striking Sequoia workers reached an agreement with Dignity Health and returned to the 208-bed facility before health coverage ceased Aug. 1, but some said they might have stayed in the picket line longer if not for fear of losing their benefits.
“It was very scary,” said Millie Rozelles, a certified nursing assistant and member of the union’s negotiation team who was pregnant at the time. “The majority of our workers felt threatened by this transition from our employer to take away our family’s health insurance if we didn’t go back to work.”
The California Association of Health Plans raised concerns about an early version of the bill that sought to create a category for striking workers, but the industry group dropped its opposition once it determined Covered California could manage the change without it.
Covered California estimates it will spend about $1.4 million to launch the feature. The agency said it will create introduction questions to screen eligible workers and remind them to discontinue coverage once they return to work.
KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism on health issues. Along with policy analysis and surveying, KHN is one of the three main drivers of the KFF (Kaiser Family Foundation). KFF is a non-profit organization that provides information on health issues to the nation.
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