California 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 revoked medical coverage for hundreds of United Steelworkers Local 5 members at the refinery in Richmond, Calif., during a strike that ultimately lasted two months. . Thousands of Stanford Health Care nurses 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 going on strike in mid-July as contract negotiations stalled.

Freezing health insurance benefits is a common tactic in a labor dispute because without it, workers might be more easily persuaded to give in to management demands. But California lawmakers are giving the strikers an edge.

Assemblyman Jim Wood, a Democrat, hopes a new law he drafted will deter employers from cutting health benefits during labor disputes by allowing private-sector workers to maximize government subsidies. state for coverage purchased through Covered California, the state’s health insurance marketplace. The bill, which takes effect in July, was sponsored by the California Labor Federation, the 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 that,'” Wood said. “Never try again.”

According to Covered California spokesperson Kelly Green, eligible workers will have their premiums covered as if their earnings were just above the Medicaid eligibility level. The state would factor in the federal worker subsidy and cover the difference.

For example, a single person earning $54,360 a year can pay 8.5% of their income, or about $385 a month, in premiums under a mid-level health plan. Under the new striking workers law, that person choosing the same plan would pay nothing in premiums — as if that person earned $20,385 a year — for the duration of the strike.

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

An estimate shared by the unions with the state suggested the law would cost California an average of $341 a month per worker — with strikes lasting one to two months. Labor groups estimate the bill will affect less than 5,000 workers a year. California has nearly 15 million workers in the private sector and strikes are usually a tool of last resort in collective bargaining.

It is unclear how companies will react. Chevron, Stanford Health Care and Sequoia Hospital operator Dignity Health did not respond to requests for comment. The bill met with no formal opposition from businesses or taxpayer groups. California covered grants are funded by a mix of federal and state funds under the Affordable Care Act, so there is no direct cost to businesses.

Last year, Governor Gavin Newsom signed the Public Employees Health Protection Act, which prohibits public employers from ending health coverage during an authorized strike. The new law for private industry is different: there is no ban or financial penalty for revoking health benefits during strikes.

Nationally, Democrats in the House and Senate have pushed for an outright ban on the practice, but no bills have been sent from committee.

When California workers lose their employer-sponsored health benefits, they may become eligible for the state’s Medicaid program, known as Medi-Cal, or be eligible to purchase health insurance through Covered California. With the latter option, workers could receive a range of grants to help pay their monthly premiums. Generally, the lower a household’s income, the greater the subsidy.

But even when workers are eligible for covered California, that insurance can be far more expensive than the plans they had as part of their job — sometimes consuming 30% to 40% of their income, supporters said. And striking workers may experience delays since coverage may not take effect until the following month.

“That’s one of the downsides of having a job-tied health system,” said Laurel Lucia, health program director at UC Berkeley Labor Center. “We’ve seen during the pandemic, when there were furloughs or layoffs, people lost employment-based 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 was cut Aug. 1, but some said they could have stayed on the line longer picketing except for fear of losing their benefits.

“It was pretty scary,” said Mele Rosiles, a certified practical nurse and member of the union’s bargaining team who was pregnant at the time. “The majority of our workers felt threatened by this decision by our employer to cut our family’s health insurance if we did not return to work.”

The California Association. of Health Plans raised concerns about an early version of the bill that sought to establish a category for striking workers, but the industry group dropped its opposition once it was determined Covered California could administer the change without him.

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

This story was produced by KHN, which publishes California Healthline, an independent editorial service of the California Health Care Foundation.

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