Wednesday, August 21, 2013

ACA will raise cost of farm labor--and food, too

The New York Times reported today about the consequences of the Affordable Care Act (ACA) for the cost of farm labor and, in turn, the cost of food.  Sarah Varney's story is set in California, where farm laborers are typically employed year round rather than seasonally, as the case in many other places.  (Another post about year-round ag workers is here).  Employment of full-time workers means farm labor contractors cannot easily put the "workers on a 28-hour workweek like Starbucks, Denny's and Walmart are considering" doing to avoid the ACA mandate.  It also means that the contractors, who operate on very small margins--around 2%--will have to raise the prices they charge farms, which will in turn push up food prices.

Varney writes:  
Insurance brokers and health providers familiar with California's $43.5 billion agricultural industry estimate that meeting the law's minimum health plan requirement will cost about $1 per hour employee worked in the field.     
The minimum health plan under the new law will is expected cost about $250 a month in California’s growing regions, a premium which includes a high deductible--$5K a year.  With the following vignette, Varney explains why it is not feasible to pass this insurance costs onto the workers:  
On a recent morning, Jose Romero pulled weeds from a row of lush tomato plants. Mr. Romero, 36, arrived at the field around 5 a.m. and worked until sunset. Like many of the other workers in the tomato field, he was surprised to learn that his employer, Mr. Herrin at Sunrise Farm Labor, would have to offer him health coverage, and that he could be asked to contribute up to 9.5 percent of his wages to cover the costs. 
“We eat, we pay rent and no more,” Mr. Romero said in Spanish. “The salary that they give you here, to pay insurance for the family, it wouldn’t be enough.” 
I am relieved that Varney reports a "widespread agreement among agricultural employers, insurance brokers and health plans in California that low-wage farmworkers cannot be asked to pay health insurance premiums."

On this point, Varney quotes a labor contractor, Chuck Herrin, the owner of Sunrise Farm Labor in Huron, California:  
He’s making $8 to $9 an hour, and you’re asking him to pay for something that he’s not going to use? 
The most interesting thing about this quote is the "something that he's not going to use" part.  Are Mr. Herrin's assumptions based on perceptions of Latino culture?  On the age and perceived health of the workers and their families?  

Or maybe the assumption that farm workers won't use health insurance if they have it is based on immigration status.  Varney notes the complication that immigration status poses for many of the workers because they may be in the country without papers. As one farm labor contractor in Napa Valley noted, the workers are "[n]ervous they’ll be tracked and then somehow the possibility of being identified, and the fear of being deported or not being allowed to work."

Cross-posted to Agricultural Law.

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