Research shows that statewide paid family leave laws have a slew of benefits for both employees and employers across industries, from higher worker morale to health improvements among children. But for skilled nursing operators, this type of legislation could have an unintended negative consequence: a decline in census.

The implementation of generous paid family leave (PFL) protections in California led to a significant decline in the state’s skilled nursing population, according to a new study in the Journal of Policy Analysis and Management — and the results could take on a greater significance as New York State rolls out its even more expansive policy this year.

The researchers used California as an example due to its worker-friendly PFL laws, first introduced in 2004. Under that legislation, employees can take six weeks of paid time off to care for family members, receiving 55% of their actual salaries up to $1,104 per week.

Between 1999 and 2008, nursing home utilization in the Golden State dropped by 0.65 of a percentage point. While the researchers admit that number appears small, they note that it’s all about the context: Because 5.7% of Californians aged 65 and older lived in nursing homes in 2003, the first year before the law was implemented, that translates to a decline of 11% in the proportion of older Californians living in nursing homes.

For instance, in 2009 alone, the state would have seen 20,800 more SNF residents if the laws were not in place, study authors Kanika Arora of the University of Iowa and Douglas A. Wolf of Syracuse University write. That number would be enough to completely fill 217 nursing facilities in the state at once, the researchers note — or the equivalent of 18 full or average-capacity nursing homes if the stays were evenly distributed throughout a year and each lasted a month.

This effect, while unintended, does make sense: If workers have an increased ability to care for elderly relatives at home without taking a significant financial hit, they could provide a meaningful substitute for skilled care.

“In the absence of PFL, a worker might carry out a plan to take unpaid leave in order to provide a limited amount of parent care, where that care is part of a more extensive program of care that is both anticipated and shared among family members or other providers,” the researchers note. “More likely, however, care provision in this context represents the worker’s response to an unanticipated shock to the system, such as a catastrophic health event befalling the parent, or the failure of alternative suppliers of care to materialize.”

In that vein, the researchers do point out that family members may not be equipped to replace short-term, post-acute SNF care. But relatives could provide the kind of long-term custodial care that federal and state governments have been attempting to shift from institutions to home and community-based providers.

Consequences beyond California

On January 1, New York State’s new PFL law took effect, providing private employees with eight guaranteed weeks of leave at 50% of their wages, capped at $652.96 — or half of the average weekly wage in the state. Those benefits will increase gradually until 2021, finally reaching 12 weeks at two-thirds of weekly wages, which employees can receive after the birth of a child, to care for.a loved one, or to manage home life while a relative is serving overseas on active military duty.

That law, along with similar legislation being mulled in other states, could have a wide-ranging and unexpected effect on the long-term care industry — though the researchers also point out that the nursing home Medicare and Medicaid savings could potentially be outweighed by increased employer administrative costs and non-monetary burdens on family caregivers.

“As a growing share of Americans express support for paid family and medical leave, and more states implement PFL laws, or debate the adoption and extension of such laws, empirical evidence on a broad range of policy impacts — such as the LTC service use studied here —can inform these policy debates,” Arora and Wolf wrote.

The research was supported with a grant from the Russell Sage Foundation, a New York City-based social-science research organization.

Written by Alex Spanko