California health care minimum wage: New estimates for impacts on workers, patients, and the state budget

This brief analyzes the impact the law is projected to have on workers, patients, and the state budget in the first year of the policy. [...] The estimated number of workers affected by the law includes 322,000 workers (76%) employed directly by health care facilities and earning below the minimum standards, and 76,000 workers (18%) who will receive indirect wage increases due to spillover effects on the wages of workers in the same facilities earning somewhat above the new minimum wage. [...] The state will bear only a fraction of these increased expenditures through its roles as the employer of certain health care workers, the purchaser of health benefits for state employees, and the payer of Medi-Cal benefits alongside the federal government. [...] If the state decides to increase Medi-Cal rates, the Medi-Cal share of the increase in labor costs should only reflect a fraction of the overall increase in total health care expenditures due to the law given that the state- and federally-funded Medi-Cal program paid for 20.6% of California personal health care expenditures in 2019, according to Center for Medicaid and Medicaid Services estimates.. [...] To the extent that health care workers newly enroll in job-based coverage, it could have an indirect cost to the state if the state aims to fully reimburse facilities for the Medi-Cal share of the higher labor costs that result from the law.