The Coming Insurance Storm

Employers face a brutal increase in health-insurance premiums for 2023, Axios’ Arielle Dreher writes from a Kaiser Family Foundation report out this morning.

  • Why it matters: Premiums stayed relatively flat this year, even as wages and inflation surged. That reprieve was because many 2022 premiums were finalized last fall, before inflation took off.

“Employers are already concerned about what they pay for health premiums,” KFF president and CEO Drew Altman said.

  • “[B]ut this could be the calm before the storm … Given the tight labor market and rising wages, it will be tough for employers to shift costs onto workers when costs spike.”

🧠 What’s happening: Nearly 159 million Americans get health coverage through work — and coverage costs and benefits have become a critical factor in a tight labor market.

🔎 Between the lines: In the tight labor market, some employers absorbed rising costs of coverage instead of passing them on to workers.

  • An October survey of 1,200 small businesses found that nearly half had raised prices to offset rising costs of health care.

🧮 By the numbers: It cost an average of $22,463 to cover a family through employer-sponsored health insurance in 2022, KFF found.

  • Workers contributed an average of $6,106.

Read the report

Developing a compelling value proposition for employees

As we’ve been discussing, the COVID pandemic and ensuing economic environment have driven health system job vacancies and attrition rates to all-time highs. Right now, for myriad reasons, many hospital workers are deciding that the financial, emotional, and professional benefits of working for a hospital are outweighed by the toll working in a hospital takes on them personally.

Health systems are responding to this challenge with a wide variety of discrete measures—including hiring and retention bonuses, incentive pay, employee wellbeing initiatives, and expanded professional development opportunities— that target specific groups of employees, but don’t form a long-term solution to workforce instability. 

To rebuild a stable and committed workforce, health systems must create, and then communicate, a compelling employee value proposition—a concise statement highlighting why employees should work for them.
The graphic above shows what we believe are the key components of a successful employee value proposition, which must have a clear vision and focus on the things most important to employee needs: compensation, work-life balance, and career support. Systems can use the guiding questions listed in each column to craft a value proposition that is differentiated in their local labor market, informed by their level of resources, and undergirded by their own culture and values.

Citing inequity, hospitals campaign to overturn LA’s new $25 minimum wage for healthcare workers

A hospital industry-backed campaign argues that a new pay hike’s exclusion of public facilities and other provider organizations will lead to an exodus of workers. Proponents of the measure say it will rejuvenate a battered workforce and that the industry is simply looking to protect pandemic profits. (City of Los Angeles and Marqueece Harris-Dawson)

California hospitals have launched a campaign to roll back Los Angeles’ newly enacted $25 per hour minimum wage for many private sector healthcare workers.

The Healthcare Workers Minimum Wage Ordinance was signed Friday by Los Angeles Mayor Eric Garcetti after the city received a petition for the pay increase organized by the labor group SEIU-United Healthcare Workers West (SEIU-UHW) and signed by more than 145,000 people. Los Angeles’ current minimum wage is $16.04.

The pay bump is set to take effect 31 days after being published by the city clerk, will be adjusted annually for cost of living starting in 2024 and will raise wages for roughly 20,000 healthcare workers across the city, according to the mayor’s office. Those impacted include non-clinical staff, such as food service workers, groundskeepers and maintenance workers, according to the ordinance.

“Working long, grueling hours and absorbing insurmountable stress, the burnout being felt from the pressures of COVID-19 has been prevalent, causing an alarming number of healthcare workers to leave the profession altogether,” Los Angeles Councilmember Curren Price said in a statement. “The approval to raise their wages demonstrates to the countless workers that they are valued, seen, heard and above all, their lives matter.”

The ordinance was opposed by hospitals under the banner of the No on the Unequal Pay Measure Coalition, a campaign sponsored by the California Association of Hospitals and Health Systems.

The group is now seeking enough signatures to put the wage hike in front of Los Angeles voters, which would block the increase from going into effect until a 2024 election yields a verdict. The hospitals-backed push would require nearly 41,000 signatures to be submitted within 30 days.

The coalition paints the Healthcare Workers Minimum Wage Ordinance as an “inequitable, arbitrary and discriminatory” move that would ultimately harm patients and workers.

Because it applies only to certain workers at private hospitals, hospital-based facilities and dialysis clinics, the “vast majority” of Los Angeles healthcare workers are excluded from the measure’s pay increase, the coalition said.

As such, the ordinance will drive a flight of talent from public hospitals and other non-covered facilities such as community health clinics, Planned Parenthood clinics and nursing homes, the group said.

Workforce shortages at these facilities would disproportionately harm the disadvantaged, underserved and uninsured communities whom these facilities more often serve, the coalition said. Service cuts would also be in the cards as provider organizations contend with tens of millions of dollars in increased annual costs, they said.

“We all agree healthcare workers are heroes, but this Unequal Pay Ordinance is deeply flawed, inequitable and will hurt workers and patients,” the coalition said.

The city and proponents of the measure viewed much of the opposition as a push for profits.

In the ordinance’s text, the city highlighted “huge profits in the billions of dollars” and “increasing profit margins” health systems have seen during the pandemic. The city government wrote that “the healthcare industry needs to use some of its profits to fairly compensate workers who are sacrificing every day to care for patients.”

In a release celebrating the ordinance’s signing, SEIU-UHW said healthcare employers “have failed to compensate us for our dedication and sacrifices” and “have more than enough to raise wages.”

The group noted similar wage increase efforts ongoing in eight other California cities as well as a push to bring the $25 minimum to all of the state’s healthcare workers.

In a statement to the Los Angeles Times, SEIU-UHW spokesperson Renée Saldaña said the hospitals “are out of step with local voters if they think the solution is to slash wages for the caregivers who got us through the pandemic. … The problem that needs to be addressed is bloated executive compensation that is driving up healthcare costs for Angelenos.”

George Greene, president and CEO of the Hospital Association of Southern California, told the paper that many of the region’s hospitals are “reeling” financially due to the pandemic. He also said the city passed the ordinance without conducting any type of analysis regarding the impact it would have on the area’s hospitals.

Physician residents and fellows unionize at two major California health systems

Seeking stronger workplace protections, physician residents and fellows at both Stanford Health Care and the University of Southern California’s (USC) Keck School of Medicine have voted to join the Committee of Interns and Residents, a chapter of the Service Employees International Union (SEIU).

Despite being frontline healthcare workers, most Stanford residents were excluded from the first round of the health system’s COVID vaccine rollout in December 2020. The system ultimately revised its plan to include residents, but the delay damaged Stanford’s relationship with residents, adding momentum to the unionization movement. Meanwhile, Keck’s residents unanimously voted in favor of joining the union, aiming for higher compensation and greater workplace representation.

The Gist: While nurses and other healthcare workers in California, as in many other parts of the country, have been increasingly banding together for higher pay and better working conditions, physician residents and fellows contemplating unionization is a newer trend. 

Physicians-in-training have historically accepted long work hours and low pay as a rite of passage, and have shied away from organizing. But pandemic working conditions, the growing trend of physician employment, and generational shifts in the physician workforce have changed the profession in a multitude of ways. 

Health systems and training programs must actively engage in understanding and supporting the needs of younger doctors, who will soon comprise a majority of the physician workforce.