Insurance plan for farmworkers falls short of Obamacare rules

May 26, 2014 5:44 PM PT

Reporting From Sacramento — Two landmark liberal healthcare achievements are on a collision course in California, and the result could be higher costs for taxpayers.

Years ago, legendary activist Cesar Chavez helped create the first health insurance plan for farmworkers who toiled for meager wages in California’s fields. The plan, funded by the workers and their employers, is named after Democratic icon Robert F. Kennedy, who allied himself with Chavez.

But like many other insurance plans around the country, it doesn’t fully meet requirements set by President Obama’s healthcare law. Unless supplemental insurance is purchased, the farmworkers say, 10,700 people could lose coverage.

Some Democrats want taxpayers to pick up the $3.2 million tab for the extra insurance so the healthcare plan can keep operating.

But the proposed subsidy has sparked concern about Democrats trying to prop up one union’s healthcare coverage when other insurance plans have also struggled to meet new federal requirements.

“There is a question of fairness here,” said Timothy Jost, a health policy expert and professor at Washington and Lee University School of Law in Lexington, Va.

The proposal is being pushed by United Farm Workers, once led by Chavez. A legislative panel last week recommended including the money in the state budget, which is being negotiated by lawmakers and Gov. Jerry Brown ahead of a June 15 deadline.

Sen. Ellen Corbett (D-San Leandro) said the subsidy, which would be drawn from cigarette taxes, would “support some of our hardest workers, who bring our food to the table.”

It’s also backed by Senate leader Darrell Steinberg (D-Sacramento). His spokesman, Mark Hedlund, said taxpayers will be on the hook for even larger costs if the farmworkers wind up on Medi-Cal, the state’s healthcare program for the poor.

Other organizations — including the United Agricultural Benefit Trust, which provides coverage to 35,000 farmworkers and their families — have shouldered the higher cost of upgrading their insurance to comply with Affordable Care Act regulations.

Clare Einsmann, the trust’s executive vice president, asked why the state should subsidize the United Farm Workers’ coverage.

“Creating a special set of rules for one plan, I don’t know if that’s appropriate,” she said. “Our plan absorbed the cost.”

A United Farm Workers spokeswoman did not respond to questions about why the union needs the state to subsidize its healthcare plan. The organization’s lobbyist, Esperanza Ross, refused to answer questions in the Capitol last week.

Hedlund said lawmakers would consider using additional cigarette tax money to help other healthcare plans if they faced similar problems.

When the proposal was introduced at a legislative hearing last week, Sen. Mike Morrell (R-Rancho Cucamonga) said it “came out of nowhere.”

“It seems like we are picking winners and losers,” Morrell said. “I don’t know why this particular group [would be] sent $3 million.”

United Farm Workers has lobbied on state budget issues since the beginning of last year, according to disclosures filed by the union, and is a reliable supporter of Democrats.

In 2010, the UFW’s national political action committee provided more than $10,000 to Brown’s gubernatorial campaign and thousands more to legislative candidates. And Dolores Huerta, who helped create the union with Chavez, has helped pitch Obamacare coverage to Latinos in California.

The union’s insurance, the Robert F. Kennedy Medical Plan, falls short of new federal regulations because it limits annual benefits to $70,000. Although the plan received a waiver to keep operating until September, such caps are being barred under Affordable Care Act rules.

Purchasing replacement insurance would increase costs by 35% to 80%, according to a legislative analysis that cited information provided by the Robert F. Kennedy Medical Plan.

However, the plan could keep operating with supplemental insurance that would cover costs exceeding the annual cap. A state subsidy would prevent the additional cost from falling on farmworkers or on the businesses that employ them.

According to the legislative analysis, consultants with the Robert F. Kennedy plan say that without supplemental coverage, half its members would end up on government insurance rolls, costing $4.7 million — $1.5 million more than the price of the subsidy.

“The affected individuals know that they’re going to be out in the cold and we know that we’ll end up shouldering the cost,” said Sen. Bill Monning (D-Carmel).

The proposed $3.2-million subsidy would last one year. Meanwhile, Hedlund said, the union is trying to have its waiver extended.

Brown’s Department of Finance is skeptical of the proposed subsidy. One of its analysts, Aaron Coen, expressed concern about “setting a precedent for other plans” that may want financial assistance.

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Times staff writer Chad Terhune in Los Angeles contributed to this report.