Proposition 8, which would limit the profits of kidney dialysis clinics, is yet another in a long line of ballot measures that should never have been put before voters.
This one involves a special interest — a labor union — trying to obtain from the ballot box what it could not achieve through the legislative process. Unfortunately, such unworthy initiatives are appearing on the state ballot mainly because a group or an individual with an ax to grind has the money and wherewithal to gather the required signatures.
This complex measure on the Nov. 6 ballot is there mostly through the efforts of the Service Employees International Union-United Health Care Workers that has been attempting to organize workers and increase staffing at California’s two largest kidney dialysis clinics. The union contends that the clinics’ cost-cutting moves are putting dialysis patients at risk.
But instead, this ballot measure could lead to fewer clinics providing dialysis for patients who critically need the service, according to the independent Legislative Analyst’s Office.
And that could be a matter of life and death for the 80,000 Californians who receive dialysis treatment three times a week in the state’s 588 licensed dialysis clinics. Physicians say that patients missing even one treatment increase their risk of death by 30 percent.
The SEIU made the decision to use a ballot measure as leverage to win concessions from two California for-profit dialysis firms — DaVita Kidney Care and Fresenius Medical Care — that provide nearly 70 percent of the treatments for Californians experiencing kidney failure. The union accuses the for-profit firms of price gouging and notes their profit margins are close to 20 percent.
Prop. 8 would cap the firms’ profits at 15 percent and would force them to offer rebates to insurance companies at the end of every year if their profit margins exceed the cap.
But the issue is not nearly so simplistic. Price-setting for dialysis treatment — like practically all medical procedures — is complicated. Medicare and Medi-Cal reimbursements for dialysis treatments, for instance, don’t come close to covering the costs for firms. To offset the shortfall, dialysis firms charge patients with private insurance a higher rate. The alternative is operating at a loss, which is unsustainable.
In addition, the Legislative Analyst’s Office warns that how state regulators interpret Proposition 8 and how dialysis firms react will create uncertainty in the field. “In some cases,” the LAO says, “owner/operators might decide to open fewer new CDCs (chronic dialysis clinics) or close some CDCs if the amount of required rebates is large and reduced revenues do not provide sufficient return on investment to expand or remain in the market.”
There’s little doubt that the two companies that operate most of California’s dialysis clinics are hugely profitable. In 2017, for instance, DaVita netted $1 billion. The lack of competition in the industry may well lead to higher costs and overcharging.
But this measure, in attempting to regulate profit, deals with policy issues that should first have been taken up by legislators. Taking this directly to voters would be a last resort if no satisfactory remedies resulted from legislative give and take — a process that allows the complicated wording of new laws to be thoroughly reviewed and then altered if problems arise, as they often do.
But that’s not what is going on with Prop. 8. What’s really happening with this measure is that the SEIU-UHW is attempting to gain leverage over potential legislation to enact new regulations on dialysis clinics. The union has used this strategy before. In 2016, the SEIU-UHW West collected signatures for an initiative to increase the minimum wage to $15 an hour; however, the initiative was withdrawn after negotiations with legislators resulted in an increase in the minimum wage over an extended time. This time, however, the issue is going straight to voters. It’s the wrong way to regulate an industry and it could result in clinics closing and put the lives of thousands of patients at risk who depend on dialysis treatments. Vote No on Proposition 8.