Nursing Shortages Will Put California's Plans for Universal Healthcare on Hold

Specifics remain sparse, but universal healthcare will surely increase demand for medical services, and California's already low on nurses.

Based on his inaugural promises, early administrative appointments and first budget, California Gov. Gavin Newsom is preparing to make some type of universal healthcare coverage the centerpiece of his administration. It is unclear if he will take the single-payer route or focus mainly on expanding access for the state's residents to various state and federal healthcare programs, including Medicare.

Whatever one thinks about the wisdom of expanding medical care in this manner, it's clear that demand will increase for medical services. That is the economic reality whenever a highly sought-after service is subsidized, and therefore offered to more people at a discounted price. That means more pressure on the existing system of medical care and a growing need for the services of people who work in the healthcare field.

In particular, Newsom's proposals—whatever their final details—will exacerbate a long-running problem that California policy makers have thus far failed to address: The state's growing shortage of nurses. A 2017 report by the National Center for Health Workforce Analysis, a project of the U.S. Department of Health and Human Services, predicted the need for registered nurses to grow by 28 percent by 2030 largely because of an aging population and an aging workforce. Many states are on track to keep up with the demand, but not California.

"If the current level of health care is maintained, seven states are projected to have a shortage of RNs in 2030, with four of these states having a deficit of 10,000 or more FTEs, including California (44,500 FTEs), Texas (15,900 FTEs), New Jersey (11,400 FTEs) and South Carolina (10,400 FTEs)," according to the report. (FTE stands for "full time equivalents.")

The report notes that nursing staff levels tend to be cyclical, with some periods of surplus. However, the overall trend, especially in California, is for a continued shortfall, especially as employers and legislatures move to require that all nurses eventually receive a four-year bachelor's of science in nursing (BSN) degree rather than a two-year associate's degree in nursing . [Both degrees make you an RN.] That will further limit the supply of nurses given the additional time and cost involved in receiving a more rigorous nursing degree.

A 2016 report by the University of California San Francisco found that "many Chief Nursing Officers are experiencing difficulty recruiting RNs for specialized positions and that more than 90 percent of hospitals reported demand for RNs being greater than the available supply. Hospital vacancy rates have been rising since 2013, reaching 5.9 percent in 2016. There also has been growth in the share of newly graduated RNs reporting they are employed within 12 months of licensure, rising from 59 percent in 2013 to 84 percent in 2016." The bottom line: despite occasional temporary surpluses, the trajectory is clearly toward more severe shortages.

Another way to measure the demand for nursing is to look at the nurse-to-population ratio. California "has ranked a dismal 48th in the nation for the past 10 years," according to the trade journal, Working Nurse. "In 2013, California had an estimated 657 RNs for every 100,000 population, well below the national average of 874 RNs per 100,000. The Nurse Workforce Report Card gave California's RN supply a 'D' grade and projects that by 2030 we will be more than 193,000 nurses short of our nursing needs." Those poor ratios come after the state mandated lower ratios 10 years ago. The publication termed it "wishful thinking" that such a law would "somehow resolve our nursing shortage."

The problem is not salary. California has the second-highest nursing salaries in the nation (more than $100,000 annually), second only to Hawaii. So even with attractive salaries and benefits, the state is falling behind in its efforts to meet the demand. The governor has spoken of the need to control healthcare costs. One way to do that, of course, is to assure that there are enough nurses to fill existing slots so that pay levels won't have to soar even higher to attract new candidates.

Despite the obvious shortage, the California Board of Registered Nursing(BRN), which is the state's nursing-related regulatory agency, appears to have imposed caps on student enrollment in some private nursing programs. That's not only counter-productive, it may be beyond its authority: There is nothing in the BRN's mandate that allows it to determine the number of nursing graduates.

The board has echoed concern "from public schools that some private schools with more resources are providing monetary support to the hospitals and/or paying preceptors, and public schools do not have the resources to do this." This is called "clinical displacement." This is bureaucratic nonsense. The state should assure that there is an adequate number of properly trained nurses—not worry about whether those nurses graduate from public or private programs. The state's public system cannot accommodate the number of applicants.

California's nursing education system has long had too few slots for the number of qualified nursing candidates, a situation going back more than a decade. In 2007, the Legislative Analyst's Office explained, "the number of applicants to nursing schools in California far exceeds the number of available slots," with 28,400 eligible applicants for 11,000 first-year slots. The space shortage was so severe that many public schools use a lottery system to select students, which has left qualified applicants searching for an education among various private and trade schools—or sometimes leaving California altogether.

Some people who advocate for limiting the supply of nurses propose further increasing wages to fill the gap rather than in moving many new nurses through the pipeline. They sometimes argue that the shortage mainly is in experienced nurses or in certain regions of the state. The result would be to restrict the supply of qualified nurses, which makes it tougher for the state to meet its healthcare goals.

It is a strange conundrum. The nation is facing nursing shortages. There is an abundance of qualified students to fill the gap, but the state is imposing barriers to accommodate them. If the Newsom administration is serious about expanding access to healthcare coverage for all California residents, then it needs immediately to address a problem that has been lingering for many years.

This column was first published by the Orange County Register.

Steven Greenhut is a contributing editor for the California Policy Center. He is Western region director for the R Street Institute. Write to him at [e-mail].