What to know about California’s clinic initiative, Prop. 44

By Kristen Hwang, CalMatters

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The same union that put forward the billionaire wealth tax has another, lesser-known proposal on the ballot: Proposition 44.

Service Employees International Union-United Healthcare Workers West wants voters to change how community health clinics spend money and penalize those that violate the ballot initiative’s provisions. The union claims too many clinics spend money inappropriately on things like high executive salaries rather than patient care. Clinics say they already prioritize patients and the initiative could bankrupt many facilities.

While public interest in the billionaire tax fight dwarfs all other ballot measures, Prop. 44 is also shaping up to be contentious. Here’s what to know about it. 

What would the proposition do?

Prop. 44 would require community health clinics, known as federally qualified health centers, to spend 90% of their revenue on “program services” that advance their mission to provide charitable care to low-income and uninsured patients. The proposition would prohibit clinics from spending more than 10% of revenue on other things such as administrative expenses. 

It would also penalize clinics that don’t meet the new 90% spending threshold. The attorney general could fine clinics that don’t comply, and the money would go into a special fund reserved for health workforce spending.

Community health clinics are nonprofits that are required by law to reinvest 100% of revenue back into the organization regardless of how voters decide on Prop. 44.

Most clinics spend about 80% of revenue providing health services, although some spend less, according to the nonpartisan Legislative Analyst’s Office.

Just one in three likely voters support the initiative, according to a September poll from the Public Policy Institute of California. 

Who supports it? 

SEIU-UHW is the primary proponent of the initiative and has raised about $17 million to support the campaign, mainly from union coffers. The union tried last year to get lawmakers to pass a bill to do nearly the same thing, but it died in committee. The group argues that dramatic federal healthcare cuts targeting programs for low-income patients make it crucial for clinics to spend money on patient services rather than administrative or other costs.

“We’re seeing clinics that have extravagant fundraisers or art collections or CEOs that are paid in the millions while their patients are struggling to get appointments, while the workers are dealing with broken equipment,” union spokesperson Renee Saldana said. 

Saldana said the initiative is meant to secure spending for patients and workers, not take money away from clinics. It would also allow clinics to earn penalty money back if they come into compliance.

Who opposes it?

Opponents include groups representing clinics, doctors and hospitals as well as the unlikely bedfellows of the California Democratic, Republican and Working Families parties. They’ve collectively raised about $37.6 million against the measure.

Francisco Silva, chief executive of the California Primary Care Association, which represents clinics, called the initiative an “existential threat.” Clinic spending is already highly regulated, Silva said, and the measure would force clinics to cut services, cut staff or close. 

Most clinics would pay a collective $1.7 billion in penalties in the first year and nearly half of all clinics in the state could close, according to a study commissioned by the primary care association.

“In many communities, the community health center is the only source of care,” Silva said. “You’re going to be losing the basic safety net if you lose half of the community health centers.”

Silva said that the initiative would prevent clinics from spending on things like patient navigators, translators and food pantries. It would also prevent clinics, he said, from investing in capital improvements like renovations and new buildings. The union disagrees and says the initiative allows the attorney general to decide what type of spending counts toward patient services. 

If the Legislature rejected this, why put it on the ballot?

Special interest groups have used ballot initiatives — or the threat of them — to gain political leverage for decades, but perhaps no other group has done so more effectively or prolifically as SEIU-UHW. The union, which represents 120,000 healthcare workers, has successfully used ballot initiatives to secure deals in Sacramento. Its biggest achievement was a $25 per hour health worker minimum wage in 2023. 

But the primary care association alleges those practices violate anti-racketeering laws. In a complaint filed in September in the U.S. District Court for the Eastern District of California, the association and several clinics allege the union has unlawfully offered to kill Prop. 44 in exchange for more union membership at clinics or for the association to withdraw its opposition to the SEIU-UHW supported billionaire wealth tax. 

“Dave Regan and SEIU-UHW are extorting health centers by using the ballot measure process as as a way to get (the association) and health centers to agree to their demands that are entirely unrelated to Prop. 44,” said Joey Cachuela, general counsel for the primary care association, referencing the union’s president.

Saldana said the allegations are “categorically false.” 

“This is the second time the (the association) has attempted to use legal filings to bully the healthcare workers of SEIU-UHW into backing down from holding clinics and CEOs accountable to patients,” she said. 

A judge dismissed a previous lawsuit filed by the primary care association to keep the initiative off the ballot. 

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.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.