California Bill Could Bring Additional Costs for Health Care Providers

California Senate Bill 525 is poised to increase the minimum wage for employees working in California health care facilities from $15 to $25 per hour. If passed, the increase would apply to all employees in any health care setting, including assisted living and skilled nursing facilities, dramatically increasing salary expenses for health care providers. It would also apply to employees in county agencies, including county health departments, county mental health departments, and county owned and operated health care clinics.

Maria Elena Durazo

Introduced by Senator Maria Elena Durazo on February 14, 2023, SB 525 also proposes that health care employees paid on a salary basis earn a monthly salary “equivalent to no less than 2 times the health care worker minimum wage for full-time employment in order to qualify as exempt from the payment of minimum wage and overtime.”

Within the bill, several arguments are outlined in support of raising the minimum wage, including the fact that higher wages can help attract new workers and stabilize the workforce for better quality of care. The bill also references health care workforce shortages as a reason to increase minimum wages: “Even before the COVID pandemic, California was facing an urgent and immediate shortage of health care workers, adversely impacting the health and well-being of Californians, especially economically disadvantaged Californians. The pandemic has worsened these shortages. Higher wages are needed to attract and retain health care workers to treat patients, including being prepared to provide necessary care in an emergency.”

How SB 525 Could Affect the California Senior Care Industry

According to the California Hospital Association (CHA), SB 525 could “increase costs for all health care providers by billions annually, and will mean deeper cuts and more closures.” The bill could also mean higher health insurance premiums, reduced employment opportunities available statewide, and jeopardize patient care.

No SB 525, a coalition of government, health care, educational, and business groups opposing the legislation, states that SB 525 would increase health care costs by $8 billion per year. That increase would lead to service cutbacks and closures.

Thirty-seven organizations, including the California Senior Advocates League, California Assisted Living Association, and California Medical Business Services, LLC signed a letter to the California Senate Appropriations Committee opposing SB 525. “As organizations representing employers and consumers, health care benefits are a significant cost for many businesses and SB 525 would make providing health benefits for workers even more difficult,” the letter reads.

In addition to highlighting how SB 525 would impact health care costs and lead to job loss, the letter notes that the bill would also lead to inequitable employee treatment. “California’s economic climate is profoundly challenging,” it states. “Staff shortages, supply chain disruptions, inflation, and rising housing costs are difficult for all. Unfortunately, SB 525 exacerbates these challenges by picking winners and losers – raising income for some workers while increasing costs for every other worker and their families.”

According to CHA data, California already faces a tremendous health care worker shortage, with more than 11 million Californians living in an area without enough primary care providers. CHA predicts that California needs to add 500,000 new allied health professionals by 2024 to be able to care for patients. The loss of health care jobs could exacerbate that shortage.

The potential enactment of California Senate Bill 525 raises concerns about the financial impact on senior care communities that already face many challenges. If SB 525 becomes law, California senior care communities will face another hurdle, thus requiring careful consideration of the potential consequences before any final decisions are made.

Paige Cerulli

Paige Cerulli is a contributing writer to i Advance Senior Care.