Tacking Health Care Costs Onto California Farm Produce - “You can’t put your ag workers on a 28-hour workweek like Starbucks, Denny’s and Walmart are considering.”

From The New York Times:

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

While the requirement was recently delayed until 2015, the contractors, who provide farmers with armies of field workers, say they are already preparing for the potential cost the law will add 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,” said Chuck Herrin, owner of Sunrise Farm Labor, a contractor based here. “If you don’t take the right approach, you’re wiped out.”

The effects of the 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 requirement will cost about $1 per hour per employee worked in the field.

“Everybody is afraid of the cost,” said 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 in the Central Valley. 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 law on to growers.

Mr. Herrin, who can employ up to 2,000 farmworkers — many of them longtime employees — has been warning his customers of the coming price increase due to health insurance costs.

“It’s made for some heated battles,” Mr. Herrin said 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. “That cost is going to be borne by us at the end of the day,” said Scott Deardorff, a partner at Oxnard-based Deardorff Family Farms, which grows strawberries, cauliflower and chard, among other salad bar staples, all of which are likely to be more expensive for consumers down the line.

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, part-time labor is not realistic. Pruning, picking and packing produce is full-time, nearly year-round work.

“You can’t put your ag workers on a 28-hour workweek like Starbucks, Denny’s and Walmart are considering,” Mr. McClements said.

In places like Huron, a Central Valley town surrounded by thousands of acres of farmland, there are other, practical concerns.

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.”

There seems to be widespread agreement among agricultural employers, insurance brokers and health plans in California that low-wage farmworkers cannot be asked to pay health insurance premiums. “He’s making $8 to $9 an hour, and you’re asking him to pay for something that’s he’s not going to use?” Mr. Herrin said.

The minimum compliant health plan for employee coverage under the new law will cost about $250 a month in California’s growing regions, according to insurance brokers, and includes a $5,000 deductible for medical care, although insurers cannot charge co-payments for preventive visits. “It’s unacceptable,” Mr. Herrin said of the cost.

The situation is complicated by the reality that many farmworkers apply for jobs with questionable identification, and farmers and farm labor contractors hire them anyway. (Employers say they must accept documents that look legitimate and can be penalized for directly asking if a potential employee is in the country illegally.)

Employers are trying to spread the word, a tricky process in places where the mention of government oversight can stir fear. Oscar Renteria, owner of Renteria Vineyard Management, a farm labor contractor based in Napa, has held meetings in Spanish to explain the health law to his 380 employees, some of whom may be in the country illegally.

“They’re really nervous,” Mr. Renteria said. “Nervous they’ll be tracked and then somehow the possibility of being identified, and the fear of being deported or not being allowed to work. It comes up all the time in conversations when we outline the choices.”