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 health insurance for hundreds of United Steelworkers Local 5 members at the Richmond, California, refinery during a strike that ultimately lasted two months. Thousands of nurses at Stanford Health Care They 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 they went on strike in mid-July when contract negotiations stalled.

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

Assemblymember Jim Wood, a Democrat, hopes a new California law he authored will stop employers from cutting health benefits during labor disputes by allowing workers in private industry to maximize government subsidies 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 goal of the legislation is to say, 'No, you can't do that,'" Wood said. “Don’t ever try it again.”

According to Covered California spokeswoman Kelly Green, eligible workers' premiums will be covered as if they were their income just above the Medicaid eligibility level. The state would factor in the employee's federal subsidy and cover the difference. For example, a single person making $54,360 per year can pay 8.5% of their income, or about $385 per month, for premiums under a mid-tier health plan. Under the new law for striking workers, the person who chooses the same plan would pay no premiums for the duration of the strike - as if that person earned $20,385 per year.

The federal government approved an expanded subsidy under the American Rescue Plan Act. The expanded funding will continue until 2025 according to the Anti-Inflation Act. The state's share of the subsidy could increase after federal funding ends.

An estimate unions shared with the state said the law would cost California an average of $341 per month per worker, with strikes lasting one to two months. Labor groups estimate the law 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's 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 faced no formal opposition from businesses or taxpayer groups. Covered California's subsidies are funded through a mix of federal and state funds as part of the Affordable Care Act so that companies do not incur any direct costs.

Last year, Gov. Gavin Newsom, a Democrat, signed the Health Protection Act for Public Employees, which prevents public employers from terminating health insurance during an authorized strike. The new law for the private sector is different: there is no ban or fine for withdrawing health benefits during strikes.

National, Democrats in the House and senate have pushed for an outright ban on the practice, but none of the bills have made it out of committee.

If California workers lose their employer-sponsored health benefits, they may be eligible for the state's Medicaid program, known as Medi-Cal, or may qualify to purchase health insurance through Covered California. The latter option would allow workers to receive a series of subsidies to help pay their monthly premiums. In general, the lower the income of a household, the higher the subsidy.

But even if workers qualify for Covered California, that insurance can be much more expensive than the plans they had through their job — sometimes consuming 30% to 40% of their income, advocates said. And for striking workers, there may be delays as coverage may not take effect until the following month.

“This is one of the disadvantages of a health care system that is tied to employment,” said Laurel Lucia, director of the health care program at the University of California, Berkeley, employment center. “We saw during the pandemic, when there were furloughs or layoffs, that people lost their job-related coverage when they needed it most.”

Striking Sequoia workers reached an agreement with Dignity Health and returned to the 208-bed facility before health insurance was cut off Aug. 1, but some said they might have stayed on the picket lines longer if they didn't fear losing their benefits.

“It was pretty scary,” said Mele Rosiles, a certified nursing assistant and member of the union’s negotiating team, who was pregnant at the time. “A majority of our workers felt threatened by this move by our employer to eliminate 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 would create a category for striking workers, but the industry group dropped its opposition when it was determined that Covered California could make the change without them.

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

This story was produced by KHN which published California Healthline an editorially independent service California Health Care Foundation.

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