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Read Making a Killing

home / healthcare / in the media

The Desert Sun (Palm Springs, CA)
Sep 01, 2003

by Jim Sams, Staff Writer

Health-care revamp considered;

Bill would require some employers to provide workers with insurance
Gov. Gray Davis is almost certain to endorse a bill that would move California a step closer to universal health care, according to both supporters and opponents of the measure.

Though the governor denies a decision is final, factions on both sides say he will shore up Democratic support before the Oct. 7 recall election by signing a bill that would require mid-sized and large employers to provide health insurance for their workers.

Lobbyists expect Democratic lawmakers, who control both houses, to pass the bill before the legislative session ends Sept. 12.

"The message that we have received from staff in the governor's office is that he intends to sign the bill," said Michael Shaw, a lobbyist for the National Federation of Independent Business. "If you think about the recall politics involved, there is little reason why he wouldn't."

Shaw said among Democrats the main question left for debate isn't whether Davis will sign the measure, Senate Bill 2, but whether to exempt from the mandate businesses that employ fewer than 20 people or fewer than 50.

Shaw said according to preliminary estimates, the bill would provide insurance for 3 million of the 6.5 million uninsured Californians.

However, he said, the mandate would cost employers $7 billion to $11 billion annually, an amount which would wipe out any savings to businesses that lawmakers might deliver as they simultaneously work to lower the cost of workers' compensation insurance.

"The message that we're getting, even from the so-called moderate Democrats, is that this is going," Shaw said.

Jerry Flanagan, a spokesman for the left-leaning Foundation for Taxpayer and Consumer Rights, said he also believes that Davis is on the brink of announcing his support for the health-care bill.

"There's been a lot of labor money coming in," Flanagan said. "Labor has been attempting to say this is something that will excite the base."

Davis administration spokesman Russell Lopez on Friday denied that the governor has taken a position.

"I think what they are seeing is the fact that we're meeting and talking about it," Lopez told The Desert Sun. "I just came out of a meeting and nothing was said - yea, or nay."

Hawaii currently is the only U.S. state that requires employers to offer health insurance, although Maine recently passed legislation to move closer to universal healthcare, according to Carla Plaza, a policy analyst for the National Conference of State Legislatures.

The bill would have no effect, at least immediately, on 85 percent of Riverside County businesses. According to the California Employment Development Department, only 4,687 of the 31,652 companies in the county employ more than 20 people.

A committee of leading California lawmakers will begin meeting Tuesday to consider the proposed new law, which was introduced by Senate President John Burton, D-San Francisco, and Sen. Jackie Speier, D-Hillsborough.

As currently drafted, the bill would require businesses with 20 or more employees to pay a fee to the state to cover the cost of providing health insurance with a prescription drug benefit to all employees who work more than 100 hours a month and have been employed for at least three months.

Employers could also withhold a fee from their workers' paychecks to cover up to 20 percent of the cost of the insurance.

Employers with 200 or more workers would additionally be required to pay 80 percent of the cost of family coverage.

The fee would be waived for businesses that provide employee health insurance on their own.

Both lobbyists said Democrats fear they'll lose the governor's mansion in the recall election, so this may be their last chance to get a major health care reform bill signed into law.

Willie Washington, a lobbyist for the California Manufacturers and Technology Association, said Burton has repeatedly warned employers that the Legislature will pass the bill, despite complaints that skyrocketing workers' compensation costs and state regulations are driving businesses out of the state.

"This is scaring us stupid," Washington said.

Government insurance

Advocates say businesses that don't provide insurance are passing the cost along to taxpayers. According to legislative analysts, 80 percent of the uninsured in California are employed and most of them work for companies that don't offer health plans.

One in five California residents are covered by Medi-Cal, the state and federal health-insurance program for the poor, according to state budget documents. The program will cost $24 billion in the current fiscal year, which ends June 30. Of that amount, $7 billion comes from the state treasury.

In addition, the state and federal governments will pay $964 million a year to insure 768,000 children through the Healthy Families Program, which is aimed at families of the working poor.

Dustin Corcoran, a lobbyist for the California Medical Association, said Davis will have plenty to crow about if he approves SB 2 and cuts the number of uninsured nearly in half.

"I think it's certainly a landmark piece of health care legislation and anything that accomplishes anything of this magnitude would be a great accomplishment for anybody to put on the record," Corcoran said.

Pondering layoffs

Paul Klein, owner of KDI Stoneworks in Bermuda Dunes, said he'd have to consider laying off employees if the state forces him to pay for health insurance.

Klein said his business, which manufactures and installs stone flooring and countertops, is already struggling to cope with record-high increases in workers' compensation premiums.

He said if the Legislature adds more costs, he might drop the labor-intensive installation portion of his business, which is subject to fierce competition from companies that don't necessarily follow state labor laws.

"If they can't fix the workers' comp situation and then if we were to be also hit by the health insurance, we would probably go from a 250-employee company to a 100-employee company," Klein said.

Klein said KDI Stoneworks now offers health insurance only to 30 managers and office workers. He said he offered three years ago to pay one-third the cost of insurance for the rest of his workforce, but managers polled workers and found that a majority were not interested in paying the extra cost.

Developer Dick Oliphant said mandatory health insurance would force employers to participate in a system that is spiraling out of control almost as fast as workers' compensation. He said workers should take responsibility to pay for their own insurance.

"There is insurance available for people to go buy if they were willing to spend it on that instead of other things they can spend money on," Oliphant said.
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Jim Sams can be reached at 778-4620 or by e-mail at Jim.Sams@thedesertsun.com

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