Looming Medicaid cuts supercharge California’s latest labor-industry fight

The looming impact of federal Medicaid cuts has reignited a long-simmering, costly battle between California’s medical industry and one of its largest health worker unions.

SEIU-United Healthcare Workers West, with approximately 120,000 members, has put forward two ballot initiatives to cap the pay of medical executives and require community clinics to spend the vast bulk of their revenues on patient care.

The California Hospital Association has responded with its own ballot proposal that would make it tougher for unions to spend money on political initiatives in the future. It would require approval by a union’s rank-and-file membership for any spending of $1 million or more on statewide measures, or $100,000 or more on local ones.

The competing measures, which have drawn enough verified signatures to qualify for the November ballot, come at a time when the rising cost of healthcare is emerging as a top voter concern.

The Service Employees International Union affiliate has seized upon affordability angst to resurrect a proposal for a cap on healthcare executive compensation, which it has failed to achieve multiple times before. The proposed measure garnered more than 1 million petition signatures.

“This initiative reflects the serious crisis we face and that affordability is a real thing,” said Vikas Saini, president of the Lown Institute, a Massachusetts-based healthcare think tank. “I think it also reflects grassroots anger and a desire to do something.”

Mikey Vaughn, a certified nursing assistant at Cedars-Sinai Medical Center, said that the Los Angeles hospital, despite its reputation as the go-to place for the rich and famous, often lacks supplies and staffing levels that he and his colleagues need to do their jobs effectively and without undue stress.

“The executive pay initiative would, I hope, be used to hire staff and to actually provide better resources for our patients,” said Vaughn, a member of SEIU-UHW’s executive board and political committee.

Thomas Priselac, then-president and CEO of Cedars-Sinai Medical Center, made $8.8 million in fiscal year 2024, according to the organization’s most recent available federal tax filing. Kaiser Permanente’s CEO, Gregory Adams, made nearly $13 million in 2024. Warner Thomas, head of Sutter Health, made just under $12 million.

Cedars-Sinai spokesperson Duke Helfand said if the measure passed, the hospital would be unable to recruit and retain physicians, nurses, and specialists, dramatically impairing its ability to provide health care.

“Such a scenario would be disastrous not only for Cedars-Sinai but for hospitals across Los Angeles and California,” Helfand said.

The union wants to cap compensation at $450,000 a year for senior hospital and medical group executives, as well as other administrative and managerial staff. However, the initiative does not stipulate how dollars diverted from payroll must be spent.

The union has dubbed the latest proposal the “Health Care Executive Compensation Act of 2026.” A coalition of medical industry heavyweights opposing it — hospitals, physicians, and clinics, among others — has rebranded it the “Health Care Endangerment Act.”

Carmela Coyle, CEO of the hospital association, called the measure a cynical political ploy. “It’s bad policy and it’s going to have bad consequences across California,” she said.

Glenn Melnick, a healthcare economist at the University of Southern California, said that even if the initiative were fully implemented and pay cuts enacted he doubts it would reduce the cost of healthcare for patients.

SEIU-UHW does not have an estimate of the total amount the initiative would claw back from pay packages that exceed the limit.

Opponents of the initiative note that it doesn’t target only executive pay but would affect medical practitioners who are also managers. That could include chief medical officers and chief nursing officers, as well as heads of surgery, emergency rooms, oncology, obstetrics, cardiology, and other specialties, they say.

It would be up to each hospital, health system, and physician group to report which staff members exceed the cap and by how much.

Ultimately, who is subject to the pay cap “probably will have to be battled out in court,” said the hospital association’s Coyle. “That’s why we are throwing everything we can at it.”

The second SEIU-UHW ballot initiative, on community clinics, is already in court. The California Primary Care Association, which represents clinics, filed a federal lawsuit in April seeking to invalidate it before it reaches the November ballot.

The proposed measure would require federally designated community clinics to spend at least 90% of their revenues on activities directly related to their mission of providing care for low-income populations. If it were to pass, over 90% of those clinic organizations would be on the hook for penalties totaling $1.7 billion in the first year alone and “would face similarly crippling penalties every year," according to a report commissioned by the primary care association and conducted by the Berkeley Research Group, an international consulting company.

Louise McCarthy, president and CEO of the Community Clinic Association of Los Angeles County, said many pivotal services the clinics provide — translation and transportation, for example — would likely not be counted toward the spending requirement.

“They are targeting a group of what they see as employers and we see as the safety net,” she said.

The lawsuit cites the harm to clinics and claims the proposed spending requirement would interfere with federal authority.

Renée Saldaña, a spokesperson for SEIU-UHW, characterized the lawsuit against the initiative as “a really desperate attempt by the clinic industry to try and avoid accountability.”

SEIU-UHW, proud of its political activism, is also behind a controversial billionaire tax proposal that would impose a one-time 5% levy on California residents with fortunes over $1 billion to backfill the funding gap created by federal cuts coming down the pike under Republicans’ One Big Beautiful Bill Act. The law, passed last July and signed by President Donald Trump, is projected to squeeze over $900 billion from the Medicaid health coverage program for low-income people by 2034, including as much as $30 billion annually in California.

The hospital association, the community clinic group, and the California Medical Association, which represents physicians, are neutral on the wealth tax proposal thus far. But Saldaña said all three of the union’s ballot proposals tie into an overarching strategy to counter the widening healthcare disparities caused by the federal law. Referring to the proposed pay cap, she said, “We believe the primary concern of healthcare providers, including executives, should be to serve the community, heal patients, and not be in healthcare just to enrich themselves.”

Over the years, the union has submitted dozens of local and statewide ballot initiatives, including ones to cap the pay of hospital executives, regulate dialysis clinics, and raise the minimum wage of healthcare workers.

The hospital association calculates that SEIU-UHW has spent nearly $125 million on local and statewide initiatives since 2012. But healthcare industry groups have spent far more opposing them. The hospital association data shows that the union spent nearly $36 million on three ballot proposals to regulate the dialysis industry, but dialysis companies poured in $302 million to defeat them, according to state campaign finance records.

The union’s ongoing political efforts “threaten patient access to quality health care,” according to the hospital association’s ballot initiative, which could limit how much unions spend on future ballot measures.

Saldaña hinted at a possible lawsuit should that measure pass, saying that “we don’t see the legal viability” of it. The proposal, she said, is an attempt “to silence the front-line healthcare workers.”

Ultimately, a ballot initiative won’t cure the ills that plague healthcare in the United States, said the Lown Institute’s Saini. What’s needed, he said, is “an evaluation and reimagination of healthcare.”

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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