Advertise in Print | Subscriptions
Published August 26, 2013, 10:30 AM

Calif. health law adds expense for farmers

Farm labor contractors across California — the nation’s biggest agricultural engine — are anxiously studying a provision of the Affordable Care Act, which will require hundreds of thousands of field workers to be covered by health insurance.

By: Sarah Varney, Kaiser Health News

HURON, Calif. — Farm labor contractors across California — the nation’s biggest agricultural engine — are anxiously studying a provision of the Affordable Care Act, which will require hundreds of thousands of field workers to be covered by health insurance.

And while the requirement to cover workers was recently delayed until 2015, the contractors, who provide farmers with armies of field workers, say they are already preparing for the potential cost, inconvenience and liability the new law will bring to their business, which typically operates on a slender profit margin.

“I’ve been to at least a dozen seminars on the Affordable Care Act since February,” says Chuck Herrin, owner of Sunrise Farm Labor, a contractor based in Huron, Calif. “If you don’t take the right approach, you’re wiped out.”

The effects of the new law could be profound. Insurance brokers and health providers familiar with California’s $43.5 billion agricultural industry estimate that meeting the law’s minimum health plan will cost about $1 per hour per employee in the field.

“Everybody is afraid of the cost,” says J. Edward McClements, Jr., a senior vice president at Barkley Insurance and Risk Management, based in Oxnard, about 60 miles west of Los Angeles. “It’s difficult when you’ve got 1,000 workers who’ve never had health insurance before, to get an idea of what their costs will be.”

The concern is felt from vineyards in Napa County to the almond orchards outside Coalinga, a Central Valley town best known for its state prison and mental hospital. Farm labor contractors generally rely on a 2 percent profit, and they say they will have to pass the added health care costs required by the new law on to growers. Herrin, who can employ up to 2,000 farmworkers — many of them long-time employees — has been warning his customers of the coming price increase as a result of insurance costs.

“It’s made for some heated battles,” Herrin says of his talks with growers who include his father-in-law, the owner of a Central Valley farm.

Some farmers seem resigned to higher labor costs, and to the fact that that increase will be passed on to the consumers of everything from leafy greens to crunchy nuts. “That cost is going to be borne by us at the end of the day,” says Scott Deardorff, a partner at Oxnard-based Deardorff Family Farms, which grows strawberries, cauliflower and chard, among other salad bar staples.

Across the country, employers in many other kinds of businesses are devising strategies to comply with or, in some cases, sidestep a new requirement to provide insurance for those who work 30 hours or more. Some are breaking their businesses into smaller companies, for instance, or even laying off workers. Some companies plan to shift workers to part-time status.

But in the vast, fertile fields of California’s Central Valley, farmers and the contractors who supply them with work crews must prune, pick and pack produce when it is ready, nearly year round. Ripe cantaloupe will not wait.

“You can’t put your ag workers on a 28-hour work week like Starbucks, Denny’s and Wal-Mart are considering,” McClements says.

California farmers produce half of all fruits, nuts and vegetables grown in the nation, according to the California Department of Food and Agriculture. But Guadalupe Sandoval, executive director of the California Farm Labor Contractor Association, says the state’s farmers must compete for supermarket shelf space against agricultural producers worldwide, most of whom are not paying for worker health care.

There seems to be widespread agreement among agricultural employers, insurance brokers and health plans in California that low-wage farm workers cannot be asked to pay health insurance premiums.

Uncertainty is a constant on the farm: crops fail, prices fall, plows go dull. Indeed, in Huron, where farmers have complained bitterly about water shortages, there is a force more powerful than the health law and more vexing than the stalled immigration overhaul: the weather.

“If we don’t get a lot of snow and rain this year, none of this will matter,” Herrin says. “We’ll be out of business.”

Tags: