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BREAKING: Newsom Seeks Delay in Healthcare Minimum Wage Hike Amidst Budget Deficit

California healthcare professionals anticipating a state-mandated minimum wage hike later this year may see a delay. Governor Gavin Newsom, in response to the state's projected $38 billion budget deficit, announced on Wednesday his intention to amend a law he endorsed just three months ago. This law had set the healthcare industry on a trajectory toward a $25 minimum wage.

Initially slated to commence in June, the timing of the proposed modifications is uncertain and may result in a postponement of the scheduled pay raises. Governor Newsom aims for these wage increases to align with a robust fiscal outlook for the state.

Prior to the bill’s signing, The ​​California Medical Association (CMA) and other healthcare advocacy organizations sought to make clear the potential harms that rushing into large minimum wage increases would have on patient access to care at a time when providers are already strained. Once the California Hospital Association and the California Primary Care Association indicated they would switch their approach from opposing the bill to working out a compromise, CMA engaged to limit the impact to members through exemptions and pushing for a “ramp up” to the final $25 wage. 

CMA was able to exempt medical groups with 24 physicians or less and Independent Practice Associations (IPAs). Regarding the IPAs, the employees are exempt, but if a medical group with 25 physicians or more are part of an IPA, they are still subject to the bill. 

Newsom included his request for a delay in the state budget proposal he released on Wednesday. Emphasizing his collaborative approach, the governor stated that he is actively working with legislators and the proponents of the law to formulate the necessary adjustments. These modifications are expected to be presented in the form of a new bill later this month. Additionally, Newsom's budget proposal underscores his desire for the Legislature to provide clarity on whether state health workers should be exempt from the provisions of the law.

Close to 500,000 California health care workers are anticipated to benefit from pay increases once the minimum wage law for their industry takes effect. Envisioned as a means to establish more sustainable incomes, the law aims to address the persistent challenge of staff shortages by retaining and attracting skilled professionals in the healthcare field.

The implementation of the health worker pay law is expected to incur costs for the state, particularly affecting workers at state-owned facilities. Additionally, there is an anticipation that the state might need to raise Medi-Cal rates paid to providers to mitigate some of the increased costs associated with the proposed wage hikes.

Prior to achieving a statewide wage boost, SEIU California and its affiliated chapters actively advocated for higher wages for health workers at the local level, employing strategies such as city ordinances and ballot measures. Notably, in 2022, the union secured a significant victory in the city of Inglewood, where health workers at private health facilities became eligible for a new minimum wage of $25, effective as of January 1, 2023.

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