Today the California legislature is taking historic votes to raise the state’s minimum wage to $15, phased in over the next few years. While the economic benefits of providing workers with more income are clear, increasing the minimum wage also has positive health effects.
Increasing the minimum wage improves low income workers’ health by increasing the likelihood that an employee is insured, either through their employer or through Covered California. Low income workers are far more likely to be uninsured, either because they are not offered coverage on the job or because they decline coverage because it is unaffordable. At $15 an hour, 77% of employees will accept employer sponsored coverage.
In addition to providing the needed income to afford health insurance premiums, an increase in wages allows employees to afford the co-pays for critical health care services, like doctors’ visits and prescription drugs. As employers have increased deductibles and other cost-sharing arrangements, low-income consumers are even less able to afford to obtain care, even if they have coverage. An increase in the minimum wage provides additional income to afford critical and life-saving health services.
Numerous academic studies have established that being poor is bad for your health and that the social determinants of health are responsible for the health inequities in our society. The social determinants of health are aspects of the environment in which you live. Through research, we know that access to healthy foods, clean air, a safe place to play and exercise, and other environmental circumstances impact health status. The broad academic literature on social determinants of health makes clear that improving the minimum wage will improve the health status of Californians.
Increasing the minimum wage will also improve the state’s budget. As the minimum wage increases, we estimate that General Fund spending on Medi-Cal will decline by $700 million-$800 million annually. Some working adults will shift from traditional Medi-Cal which is funded 50/50 state/federal to the Medi-Cal expansion population for which the federal government will pay 95% of the cost. Others will choose to accept employer coverage which they will be able to afford; and still other working adults will enroll in Covered California where subsidies are funded by the federal government, not the state General Fund.
Health Access applauds the Governor and the Legislature for taking this bold step to increase the minimum wage and improve the financial and health status for millions of Californians.