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Who will pay for a $25 healthcare minimum wage? The patients who can least afford it.

Published in the Los Angeles Daily News, July 11, 2023

California is in a healthcare workforce crisis. There are not enough healthcare workers for our increasingly diverse, growing, and aging population. To aid with recruitment and retention, a proposed law, Senate Bill 525, introduced by Sen. Maria Elena Durazo, D-Los Angeles, would establish a $25 minimum wage for California’s healthcare workers by the year 2025.

Sounds great, right? Pay workers more and the crisis will go away. Without sustainable funding to offset these costs, however, the legislation will worsen the crisis for safety net providers in under-resourced communities. California’s community health centers, which serve nearly one in five Californians, will have to resort to cost-cutting measures, including layoffs and closures.

Nonprofit health centers – mission-driven organizations that serve all, regardless of ability to pay – want to raise wages for staff, but we need help. If the state doesn’t chip in to help pay for the mandate, 7.7 million Californians who rely on health centers will pay.

In Los Angeles County, 1.89 million people get their care at community health centers, which operate on razor thin margins. An unfunded $25 minimum wage mandate would further weaken health centers’ financial viability.

El Proyecto del Barrio, Inc. is a health center serving the San Fernando Valley for more than 50 years and San Gabriel Valley for over 20 years. Patients come to El Proyecto for primary care, dental, behavioral health and substance use disorder services, training, and child development programs. Critical to the success of El Proyecto’s work is its dedicated staff.

While El Proyecto welcomes the opportunity to raise wages, implementing the law would not be sustainable. Wage increases wouldn’t just apply to those who make under $25 per hour. Healthcare facilities would have to increase wages for staff across the board to reflect the new minimum, costing El Proyecto an estimated $10.9 million. Layoffs could follow. The workload for the staff who remain will increase. And the remaining staff may burn out and quit. Fewer staff will result in longer wait times for appointments and services. Patients will lose.

The primary revenue stream for California’s health centers is Medi-Cal, the state’s Medicaid program for patients with low incomes. But Medi-Cal reimbursement rates for patient services – which the state of California determines – don’t compensate for the true costs of care.

Over 13 million Californians rely on Medi-Cal for health coverage. Statewide, health centers serve one in three Medi-Cal enrollees. In Los Angeles County, 64% of health center patients are covered by Medi-Cal yet Medi-Cal only provides 50% of health center revenue.

Lawmakers in Sacramento have expanded eligibility for the program, as well as the services it covers. Medi-Cal rates have remained stagnant, however, despite the increased services Medi-Cal now requires of providers. SB 525 demands health centers pay higher wages without providing the funding required to pay for increased costs.

Some ask if exempting health centers from the proposed law is the solution. It is not. Health centers would lose staff to facilities paying higher wages. Health centers are already experiencing worker shortages; we cannot afford to lose more employees.

Valley Community Healthcare is a health center serving North Hollywood and North Hills for more than 50 years. Nearly 30,000 patients from across the San Fernando Valley visit each year, 90 percent of whom are covered by Medi-Cal. Valley has increased compensation for workers to remain competitive with private hospitals and clinics, but the cost of SB 525 would be untenable. Valley would have to reduce programs such as nutrition counseling and specialty services like HIV/AIDs care and eliminate evening and weekend hours. Cuts like these will only hurt patients who rely on these services.
Community health centers want to raise wages, but SB 525 is not the answer. With sufficient investment from the state of California, health centers can pay workers more without cutting back services, programs or staff – ensuring all communities have access to the care they need.

Louise McCarthy is president and chief executive officer of the Community Clinic Association of Los Angeles County. Corinne Sánchez is president and chief executive officer of El Proyecto del Barrio, Inc. Paula Wilson is president and chief executive officer of Valley Community Healthcare. Both El Proyecto del Barrio, Inc. and Valley Community Healthcare are Federally Qualified Health Centers.

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