Prop. 44: Voters decide on spending restrictions for healthcare clinics

Californians are deciding on a union-sponsored ballot measure that would force community clinics to spend more on patient care. 

Proposition 44 would require community clinics to spend at least 90% of their annual revenue on patient care or pay fines to the state. While spending varies by clinic, on average, clinics today spend about 80% of revenue on providing services, according to a nonpartisan analysis by the Legislative Analyst’s Office. 

The labor union Service Employees International Union-United Healthcare Workers West placed Prop. 44 on the ballot. The union argues the measure will add a layer of accountability to how clinics spend taxpayer dollars. Clinics are the safety net for an estimated 7 million low-income Californians and are paid largely through reimbursements from public insurance programs and federal grants. 

Union spokespeople point to “excessive” executive salaries — some of which recently became the subject of a complaint filed with the Internal Revenue Service — as an inappropriate use of taxpayer dollars.

“Money should not be directed towards excessive executive compensation or other non-essentials that we have seen within … our clinic system,” Renée Saldaña, a union spokesperson, said.

The opposition, led by clinics, has raised $39 million to defeat the measure, more than double the $17 million supporters report contributing so far. Clinics say they’ve got a lot to lose, and so do their patients. An analysis commissioned by opponents estimates the measure could cost clinics about $1.7 billion in noncompliance penalties in the first year, forcing some of them to close or reduce services. 

“This puts our patients in danger, limiting our patients’ access to care,” Dr. Jerry Abraham of Kedren Health, a community clinic in South Los Angeles, said during a recent rally. “Unfortunately, that doesn’t mean patients’ need for care goes away. Guess where they are going to go? If they can’t come to clinics, they’re gonna go to the emergency department.” 

Clinic leaders add that their health centers are already heavily regulated by state and federal health authorities. 

A key question in this proposal is exactly what type of costs would qualify as appropriate healthcare spending.

Prop. 44 leaves the answer up to the state attorney general, directing that office to issue guidance and decide what’s appropriate healthcare spending. Depending on those guidelines, clinics argue they could be penalized for spending on critical items such as medical equipment upgrades, support staff and construction projects, or for keeping money in their budget reserves. 

Prop. 44 is the second attempt by the healthcare workers’ union to restrict clinic spending – a similar bill failed to advance last year. 

The California Primary Care Association, which represents about 2,000 community clinics, sued the union twice. First, it sued to keep the measure off the ballot, but a federal judge dismissed that case over the summer. In September, the clinics filed a separate case accusing the union and its president, Dave Regan, of exploiting the ballot process to coerce clinics into accepting the union’s bargaining demands. 

The union said the allegations were “categorically false.” This second lawsuit is still pending.

SEIU-UHW has gained a reputation for targeting health providers via the ballot box. The union sponsored proposals to regulate dialysis clinic operations in three consecutive election cycles; those measures failed all three times.

The union has also backed Proposition 40, the attention-grabbing initiative which would impose a one-time 5% tax on California residents worth $1 billion or more. 

Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.