The Wall Street Journal’s recent piece examining job growth nationally and in California (“Forget Tech and Hollywood. California Is Powered by Healthcare Jobs.” – May 11, 2026) noted that, “without [the health and human services sector], the state hosting the nation’s high-tech and entertainment hubs would have lost jobs … This gap between health-related and other parts of the economy proved greater in California than in any other U.S. state.”
Indeed, as the data show, health care employment, including social assistance jobs, is the dominant and driving force behind California’s strong economy today. Without those sectors, California actually would have lost jobs over the past four years.
And yet, state policymakers seem intent on creating needless regulatory burdens for a health care sector that has been propping up the state’s economy and is now increasingly at risk of degradation.
California policymakers are biting the very hand that feeds them.
It’s a given that California hospitals are among the largest employers in most communities in the state, employing more than 500,000 people (this doesn’t even include physicians, who contract with hospitals to care for patients). These are strong, dependable middle-class jobs for workers who make up the backbone of the economy and for whom wages have increased more than 20% in the past five years. Beyond direct employment, hospitals drive some $406 billion in economic activity annually.
But financial headwinds are growing. Federal Medicaid cuts and reductions in health insurance coverage, coupled with the Office of Health Care Affordability, which is throttling spending for those who need hospital care to levels well below cost pressures, are putting California’s golden goose on the chopping block.
If those policies are responsible for bringing hospitals to the brink of insolvency, state legislators and regulators are the ones swinging the axe.
Today, 44% of hospitals lose money every day caring for patients, and dozens are at risk of service loss or closure. Collectively, California hospitals lost $1.6 billion delivering patient care in 2024.
Now, contrast that number with the cost of some recent unfunded mandates:
- A new $25 minimum wage for health care workers will cost hospitals $8.5 billion from 2024-2029
- Recently enacted minimum staffing requirements for psychiatric hospitals will cost nearly half a billion dollars to implement and will likely result in many mental health beds being closed across the state
- A bill passed just last year to require metal detectors at every hospital entrance will cost nearly $1 billion by 2029
- An additional construction requirement that all hospital buildings be “fully operational” following a major earthquake will cost over $100 billion; that is on top of the billions already spent so that hospitals will remain standing after an earthquake and patients and workers will be safe
There are countless more, but making the implementation of any of these more reasonable would ease the shortfall and preserve hospital availability for some time to come.
Of far greater concern than the economic impact of driving hospitals out of service is the human toll.
With hospitals shuttered, or providing diminished services, patients will be left in the lurch — since 2020, 40 hospital maternity units have closed, leaving 12 counties in the state with no hospital maternity care whatsoever. That means longer travel times for care, like cancer treatment and behavioral health services. That means longer waiting times in emergency departments. For some, it could mean the difference between life and death.
All of this comes at a time when California is aging, and its residents will need even more and costlier health care services — Californians age 65 and older will grow 59% by 2040, according to the Public Policy Institute of California.
A state bill being considered this year would require an independent academic analysis of the cost of large, unfunded mandates on hospital care, but is being aggressively opposed by special interests that see any analysis as a check on their power to advance their legislative agendas.
That’s regrettable, as the mountain of regulations and red tape that has been built up in a blue state over the years now poses perhaps the greatest threat to access to vital health care services the state has ever seen.
