HomeHealthHealth CareCalifornia aims to maximize health insurance subsidies for workers during labor disputes

California aims to maximize health insurance subsidies for workers during labor disputes

this spring, Chevron workers testified that the company withdrew health insurance for hundreds of members of the United Steelworkers Local 5 at its refinery in Richmond, California, during a strike that eventually 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 weeks-long strike. More than 300 workers at Sequoia Hospital in Redwood City received a similar message after going on strike in mid-July when contract negotiations stalled.

Freezing health insurance is a common tactic in a labor dispute because without this insurance, employees can be more easily persuaded to yield to management’s demands. But California lawmakers are giving strikers an edge.

Assemblyman Jim Wood, a Democrat representing Humboldt, Trinity, Del Norte and parts of other Northern California counties, hopes a new law he has drafted will deter employers from stopping health benefits during labor disputes by private sector workers allow state subsidies to be maximized for coverage purchased through Covered California, the state’s health insurance marketplace. The billwhich takes effect in July was sponsored by the California Labor Federation, California Teamsters Public Affairs Council and the Los Angeles County Federation of Labor.

“The purpose of the legislation is to say, ‘No, you can’t do this,'” Wood said. “Don’t ever try again.”

According to Covered California spokesperson Kelly Green, eligible employees’ premiums will be covered as if their income is just above the Medicaid eligibility level. The state would take into account the employee’s federal grant and cover the difference. For example, a single person earning $54,360 a year might pay 8.5% of their income, or about $385 a month, in premiums under a medium-sized health plan. Under the new striking workers law, that person who chooses the same plan would pay nothing in premiums — as if that person were making $20,385 a year — for the duration of the strike.

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The federal government authorized an increased grant under the American Rescue Plan Act. The increased subsidy will continue up to and including 2025 under the Inflation Reduction Act. The state’s share of the subsidy could increase once the federal boost ends.

An estimate that unions shared 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 the bill will affect fewer than 5,000 workers per year. California has nearly 15 million private sector workers and strikes are generally a last resort in labor negotiations.

It is not clear how companies will respond. Chevron, Stanford Health Care and Sequoia Hospital operator Dignity Health did not respond to requests for comment. The bill met no formal opposition from businesses or taxpayers. California’s covered grants are paid for by a mix of federal and state funds as part of the Affordable Care Actso there are no direct costs for companies.

Last year, Governor Gavin Newsom, a Democrat, signed the Public Workers Protection Act, which prevents public employers from terminating health insurance during an authorized strike. The new law for the private sector is different: There is no prohibition — or financial penalty — for withdrawing health benefits during strikes.

National, Democrats in the House and Senate have pushed for a complete ban on this practice, but neither bill has been pulled out of committee.

When California employees lose their employer-sponsored health benefits, they may become eligible for the state’s Medicaid program, known as Medi-Cal, or become eligible for health insurance through Covered California. The latter option allowed employees to receive a variety of subsidies to help pay their monthly premiums. In general, the lower the income of a household, the larger the subsidy.

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But even if employees qualify for Covered California, that insurance could be much more expensive than the plans they had through their jobs — sometimes costing 30% to 40% of their income, proponents said. And striking workers may be delayed, as coverage may not take effect until next month.

“This is one of the drawbacks of a health care system tied to employment,” said Laurel Lucia, health care program director at the University of California-Berkeley Labor Center. “During the pandemic, when there were furloughs or layoffs, we saw people lose their job coverage when they needed it most.”

Striking Sequoia workers reached an agreement with Dignity Health and returned to the 208-bed facility before health coverage ended Aug. 1, but some said they might have stayed on the picket line longer if they weren’t afraid of losing their benefits.

“That was pretty scary,” said Mele Rosiles, a licensed nursing assistant and a member of the union’s negotiating team who was pregnant at the time. “A majority of our employees felt threatened by this move by our employer to cut our family’s health insurance if we didn’t return to work.”

The California Association of Health Plans expressed concern about an early draft of the bill that sought to establish a category for striking workers, but the industry group dropped its opposition once it was determined that Covered California could pass the amendment without it.

Covered California estimates it will spend approximately $1.4 million to launch this benefit. The agency said it will draft interview questions to screen for eligible workers and remind them to stop coverage once they return to work.

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KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism on health issues. Together with Policy Analysis and Polling, KHN is one of the three major operational programmes KFF (Foundation Family Kaiser). KFF is an endowed non-profit organization that provides information about health issues to the nation.

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