Health benefits, but not care, in measure
Gig workers may try to earn insurance stipend
Appbased driving services such as Uber, Lyft, DoorDash and Instacart are bankrolling California’s Proposition 22, which would keep their drivers classified as independent contractors, not employees.
Leading into the Nov. 3 election, the ballot measure — which has become the most expensive in state history — is mired in controversy and the subject of a lawsuit from Uber drivers alleging that the company inappropriately pressured them to vote for the initiative.
But what’s occasionally lost in the debate over Prop. 22 are the claims about what it will mean for appbased drivers.
Detractors, like unions and driver advocacy groups, say Prop. 22 would strip drivers of the protections of AB5, a 2019 California law whose implementation has been delayed in some industries by legal challenges. The law requires drivers to be classified as employees, which would afford them the associated benefits like paid sick leave, workers’ compensation and access to unemployment insurance.
Supporters, such as ridehailing companies and the California Chamber of Commerce, say Prop. 22 would give drivers benefits, like a guarantee of minimum earnings and compensation when they are hurt on the job, while allowing them to maintain the flexible schedule of independent contractors.
In an online ad paid for by Lyft, the company says “Prop. 22 will give them … health care benefits.”
That sounds like drivers with Uber, Lyft and other appbased companies will automatically get health insurance if Prop. 22 passes. The truth is a little more complicated.
Lyft directed an inquiry about the claim to the “Yes on 22” campaign. This is how the campaign explained “health care benefits”:
Under Prop. 22, drivers who qualify would get a stipend they could use to buy an insurance plan from Covered California, the state’s health insurance marketplace.
That stipend would be calculated like this: Appbased companies would look at the statewide average monthly premium of bronzelevel plans sold on the Covered California exchange.
The companies would then give qualified drivers a stipend of 82% of the average premium, said Geoff Vetter, a spokesperson for the Yes on 22 campaign. ( On average, U. S. employers covered 82% of premiums costs for single coverage in 2019.)
So hypothetically, if bronze plans cost an average of $ 100 per month, Uber, Lyft or a similar company would provide qualifying drivers with $ 82 per month.
Drivers would be eligible for the full stipend — all $ 82 in the hypothetical case — if they average 25 hours per week of “engaged” time, which does not include time spent waiting between jobs.
“Most drivers work part time” and spend about onethird of their time waiting for rides and deliveries, according to the nonpartisan state Legislative Analyst’s Office. Using that equation, drivers would need to work an average of 37.5 hours per week for a single company in order to receive the full stipend.
A driver who averages at least 15 but less than 25 hours of engaged time each week would be eligible for 50% of the stipend — or $ 41 per month.
The stipend would be similar to employersponsored insurance because both employers and employees would contribute to the cost of insurance, Vetter said.
“For the people who do work closer to full time, it does give them that ability to receive health care coverage by getting a typical employer contribution for that coverage,” Vetter said.
But this stipend bears little resemblance to traditional employerbased insurance, which is what drivers would get if they were considered employees instead of gig workers, said Ken Jacobs, chair of the UC Berkeley Center for Labor Research and Education.
“It has very, very little relationship to what anyone would think of as jobbased coverage,” Jacobs said. “It’s really wrong to think of this as health insurance.”
For instance, under Prop. 22, the stipends would be calculated and distributed quarterly, based on drivers’ hours. That could force drivers to periodically reassess what kind of coverage they would qualify for and could afford.
With traditional employersponsored insurance, a driver would enroll in a plan once per year and the premium wouldn’t change.
A vacation or illness could mean that drivers can’t maintain the hours required by the measure, costing them their stipend — and perhaps their insurance — for the quarter, and stripping them of the stability usually associated with jobbased coverage, Jacobs said.
And getting money to buy an individual plan isn’t the same as participating in a large group plan offered by an employer, said Jen Flory, a policy advocate at the Western Center on Law & Poverty, a nonprofit organization that advocates for lowincome Californians and opposes Prop. 22.
Covered California plans are typically less generous than the policies employees usually get through work, she said. And bronzelevel plans, which have the lowest monthly premiums, also have the highest outofpocket costs for medical services.
Consider the deductible, which is how much a person needs to pay outofpocket before insurance starts paying for care.
In 2018, fewer than half of Californians who had workbased insurance had a deductible, and on average, that deductible was $ 1,402 for a single person, according to research from the California Health Care Foundation.
The deductible on a Covered California bronze plan for an individual in 2021 will be $ 6,300 for medical services plus $ 500 for prescription drugs. Prop. 22 ties the stipend “to the highest deductible, highest outofpocket plans on the market,” Flory said. “And it’s for workers who aren’t making a whole lot of money.”
Drivers could use the stipend to buy a more generous plan, but the monthly premium would be higher and the stipend would cover less of it.
Depending on their incomes and other factors, drivers may also be eligible for tax credits and state and federal subsidies to help them afford plans on the individual market. But Flory said this amounts to the government subsidizing health insurance that employers should be paying for themselves.
It’s also problematic to base the stipends on a statewide average of bronze premiums because that doesn’t take into account the huge regional differences in the cost of care, said Gerald Kominski, a senior fellow at the UCLA Center for Health Policy Research.
“In the Bay Area, that contribution is going to buy a lot less than it would in Southern California,” Kominski said. “We’re a big state and have a lot of variation of health care costs.”
The stipend offered under Prop. 22 is a “health care benefit,” but the wording is misleading and ignores critical information.
While neither Lyft nor the Yes on 22 campaign says the proposition will give drivers health insurance, saying that it will offer them “health care benefits” gives the impression that the stipend is similar to traditional jobbased coverage. It’s not.
Drivers who value the ability to make their own schedules would have to figure out how to work an average of nearly 40 hours a week — essentially full time — to receive the full stipend. The stipend would cover a fraction of the premiums for health insurance that’s typically less generous than what they’d get as employees.
Moreover, because drivers’ stipends could change quarterly based on their driving time — which could be affected by vacation or illness — any coverage purchased with the stipend could carry a cloud of uncertainty.
Rachel Bluth is a correspondent for California Healthline. This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation. Kaiser Health News is not affiliated with Kaiser Permanente.