Employer-Sponsored Coverage Bill Would Cost Companies $11.4 Billion, Study Says
A Senate- and Assembly-approved bill (SB 2) that would require some employers in the state to provide health insurance to employees or pay into a state fund that would provide coverage would cost California companies $11.4 billion, according to a study released Wednesday by the Employment Policies Institute, the San Francisco Chronicle reports. The study, which estimates that the bill would expand coverge to 2.3 million additional people, found the estimated cost of expanding health insurance coverage under the bill to be more than two times higher than previous studies (Abate, San Francisco Chronicle, 10/2). The bill, passed earlier this month by the Legislature, would require companies with 50 or more employees to offer health insurance or pay into the state fund. The legislation would limit employee premium contributions to 20% and would require companies with 200 or more workers to provide health coverage to employees and their dependents by 2006 or pay into the fund. Companies with 50 to 199 workers would have to offer health insurance to employees by 2007. The bill would not apply to companies with fewer than 20 workers; the legislation also would not apply to companies with 20 to 49 workers unless the state provides tax credits to offset the cost of health coverage. Earlier estimates have put the bill's cost at between $1.5 billion and $6 billion (California Healthline, 10/1). The California Chamber of Commerce in September released a study that estimated that the legislation would require small and medium-sized employers to pay $5.7 billion per year in health care costs and would require employees to pay $1.5 billion per year. Earlier estimates indicated that the law would expand access to health insurance to about one million of the state's seven million uninsured residents (California Healthline, 9/16). EPI Research Director Craig Garthwaite and colleagues based the cost findings on health insurance data included in the Current Population Survey. The study found that despite the $11.4 billion cost, only about one-third of the state's 6.7 million uninsured people would obtain coverage under the bill because many of the uninsured are children not in the workforce. "An employer mandate is not an efficient way to target the uninsured," Garthwaite said.
Proponents of SB 2 "immediately refuted" the EPI study and said its estimates are "grossly inflated," the Chronicle reports. Health economists said the report was "flawed from the start" because it relied on the Current Population Survey and not the California Health Interview Survey, which they say offers a more detailed view of the state's health insurance situation. E. Richard Brown, director of the University of California-Los Angeles Center for Health Policy Research, said, "In my view, this [report's] numbers are way over the top." Brown said his research indicates the bill would provide coverage to one million additional state residents; Brown did not estimate the final cost of the bill (San Francisco Chronicle, 10/2). KPBS' "KPBS News" on Wednesday reported on SB 2. The segment includes comments from Richard Costigan, vice president of government relations for the California Chamber of Commerce; Jamie Court, director of the Foundation for Taxpayer and Consumer Rights; and Beth Capell, a policy consultant for the not-for-profit organization Health Access (Goldberg, "KPBS News," KPBS, 10/1). The full transcript of the segment is available online. The full segment is available online in RealPlayer.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.