California Aims To Maximize Health Insurance Subsidies For Workers During Labor Disputes

This spring, Chevron workers testified that the company had finally cut health coverage for hundreds of members of United Steelworkers Local 5 during a two-month strike at the Richmond, Calif., refinery. In April, thousands of nurses at Stanford Health Services were told they would lose their health insurance if they didn't return to work during the strike week. More than 300 workers at Sequoia Hospital in Redwood City got the same message when contract negotiations broke down in mid-July, when they went on strike.

Freezing health insurance benefits is a common tactic in labor disputes because without it, workers can be easily persuaded to agree to management's demands. But California lawmakers are getting ahead of the attackers.

Rep. Jim Wood, a Democrat, hopes the new law he authored will prevent employers from cutting health benefits during labor disputes by adding state health benefits to private-sector workers for coverage purchased through the state's health insurance marketplace. The bill, which will take effect in July, was sponsored by the California Federation of Labor, the California Teamsters Public Affairs Council and the Los Angeles County Federation of Labor.

"The intent of the law is to say, 'No, you can't do that.'" "Don't try that again," Wood said.

According to Kelly Green, spokeswoman for Covered California, eligible workers are covered as long as their income exceeds the Medicaid eligibility threshold. The state makes up the difference when considering federal employee benefits.

For example, a single person making $54,360 a year can pay 8.5% of their income, or about $385 a month, for a mid-range health plan. Under workers' compensation law, a person choosing the same plan would earn $20,385 a year and pay nothing for the duration of the strike.

The federal government has authorized expanded grants under the America's Rescue Plan Act. The extended subsidies will continue through 2025 under the Inflation Suppression Act. After the federal increase ends, the state's share of subsidies may increase.

According to estimates shared by unions with the state, the law would cost California workers an average of $341 a month, and that the strike would last between one and two months. According to unions, the law will affect fewer than 5,000 workers a year. California has about 15 million private sector workers, and strikes are often the last resort in collective bargaining.

It is not clear how companies will respond. Chevron, operator of Stanford Health Care and Dignity Health of Sequoia Hospital did not respond to requests for comment. The bill had no official opposition from business or taxpayer groups. Covered subsidies in California are funded through federal and state grants under the Affordable Care Act, so there is no direct cost to businesses.

Last year, Gov. Gavin Newsom signed the Public Employee Health Protection Act, which prevents public employers from cutting health coverage through authorized strikes. The new law on private industry is different: there is no financial penalty for suspending health services during a strike.

Nationally, House and Senate Democrats have pushed for a blanket ban on the act, but no bill has been sent out of committee.

California workers who lose employer-sponsored health benefits may be eligible for the state's Medicaid program, known as Medi-Cal, or may be eligible to purchase health insurance through Covered California. With the latter option, employees can get various grants to help pay their monthly bills. In general, the lower a family's income, the higher the subsidy.

But even if workers qualify for coverage in California, that insurance can be more expensive than the plans they had through their jobs, sometimes eating up 30 to 40 percent of their income, advocates said. And striking workers may be delayed, as coverage may not take effect until next month.

"This is one of the disadvantages of having a work-related health system," said Laurel Lucia, director of the UC Berkeley Career Center's health program. "During the pandemic, we've seen people lose job coverage when they need it most when they're laid off or out of a job.

Shocked Sequoia workers reached a deal with Dignity Health to restore health coverage to 208 beds before the Aug. 1 deadline, but some say they may be hanging on longer, fearing they'll lose theirs.

"It was terrible," said Mele Rosiles, a staff nurse and union member who was pregnant at the time. "Most of our employees were concerned about our employer's decision to take away our family's health insurance if we didn't return to work."

California Assn. Health plans raised concerns that an earlier version of the bill sought to create a category for covered workers, but after California bought coverage, the industry group said it could manage without the change.

Covered California estimates it will cost about $1.4 million to launch the benefit. The agency said it will generate petitions to review eligible workers and ask them to suspend coverage after they return to work.

This story was prepared by KHN, the independent editorial service of the California Health Foundation, which publishes California HealthLine.

Big change for ACA/Obamacare: No more ACA family bugs