California’s industry-leading $25 minimum wage for health care workers will rely on a major boost in federal funding and lay off thousands of state workers under a deal expected to be approved in the coming days.
The minimum wage increase for more than 400,000 health care workers, which will be phased in over several years, was set to begin June 1, but will now begin no earlier than Oct. 15 and no later than Jan. 1, based on budget agreement announced on 22 June. The Legislature is expected to approve the changes and Gov. Gavin Newsom to sign them into law before the start of the new fiscal year on July 1.
The delay is just one of several health-related measures in the nearly $300 billion government spending plan. The budget includes about $800 million in cuts to public health and health workforce programs, but they are less severe than Newsom originally proposed. It includes an 8% reduction in public health spending and maintains in-home support for Medi-Cal recipients regardless of their legal status. It is based on nearly $1.8 billion in additional Managed Care Organization tax revenue.
Newsom, a Democrat, wanted an annual trigger that would delay health care worker pay increases in tight fiscal years like this one, when the state faces a nearly $47 billion deficit.
Instead, Democratic leaders who control the Legislature agreed to a one-time trigger that would begin the raises in October if state revenue rises 3 percent more than expected or no later than January, after the state raises what is known as Hospital Quality Insurance, which allows hospitals to be taxed to raise federal money for Medi-Cal, the state’s Medicaid program.
Budget officials expect the fee increase to cover about 30 percent of the minimum wage increases. The fee currently provides about $8.4 billion to California hospitals each year, and officials predict the unspecified increase will bring in billions of dollars more.
The fee increase requires federal approval, but budget officials said they believe even such a large increase is allowed under federal guidelines. The Newsom administration plans to work out the details with the hospitals in the coming months.
Managed care plans will have to offset the remaining increased minimum wage costs with higher Medi-Cal managed care rates, budget officials said.
But the administration said hospitals expect the wage increases “will not result in significant additional costs.” That differs from what the California Hospital Association said in its successful challenge of a $25 minimum wage in a Southern California city. The union said it is reviewing the plan.
The California Association of Health Plans did not comment. The California Kidney Care Alliance said many dialysis providers had already raised wages ahead of the new requirements.
The law originally excluded employees at the Department of State Hospitals, and state budget officials said the new bill extends the exclusion to about 21,000 workers at all state-run health care facilities, with the exception of the University of California system. Proponents said the pay increases would include employees in the Departments of Corrections and Rehabilitation, Developmental Services and Veterans Affairs.
“Of course, workers are disappointed that not every low-wage health care worker will get raises this summer as originally planned by law,” said Dave Regan, president of the Service Employees International Union-United Healthcare Workers West, which lobbied for the raises. above the state’s $16 minimum wage. But he praised Democratic leaders for recognizing that “despite a historic budget deficit, California’s patient care and health care workforce crisis must be addressed.”
The University of California-Berkeley Labor Center projected that more than 469,000 health care workers will receive pay raises, with the biggest gains going to women and workers of color. The law covers lower-income employees, including certified nursing assistants, patient aides, food service workers, janitors, grounds and security personnel. California separately raised the minimum wage for fast food workers to $20 an hour.
The Health Workers Act was originally set to raise the hourly minimum at large health facilities and dialysis clinics to $23 this year, $24 in 2025 and $25 in 2026. It would raise hourly wages at community clinics to at least $21 in 2024, $22 in 2026 and $25 in 2027. Other health facilities were to reach at least $21 an hour in 2024, $23 in 2026 and $25 by 2028.
Initial increases will be pushed back several months on a one-time activation basis.
Because the raises will begin partway through the fiscal year, the Newsom administration now projects first-year costs to be $1.4 billion, down from a previous full-year estimate of $4 billion.
This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.
This article was reprinted by khn.orga national newsroom that produces in-depth health journalism and is one of the core operating programs at KFF – the independent source for health policy research, polling and journalism. |
