Sacramento Bee Examines Legal Issues Around Employer-Sponsored Coverage Bill
The Sacramento Bee Friday examined the legal issues surrounding a bill (SB 2) passed earlier this month by the Legislature that would require businesses with 50 or more employees to offer health insurance or pay into a state fund that would provide such coverage (Rapaport, Sacramento Bee, 9/19). If the bill is enacted, California would become the first state to require employers to provide specified health benefits to employees since the federal Employee Retirement Income Security Act took effect in 1974. The measure would limit employee premium contributions to 20% and would require employers with 200 or more employees to provide health coverage to workers and their dependents by 2006 to avoid paying into the fund. Businesses that employ 50 to 199 workers would have to offer health insurance to employees only by 2007. Employers with fewer than 20 workers would be exempt from the law, and those with 20 to 49 workers would be exempt from the law unless the state provides tax credits to offset the cost of health benefits (California Healthline, 9/17). If the bill is signed, a legal challenge is expected to reach the U.S. Supreme Court, and national labor groups and national business groups are "already sharpening their legal arguments," the Bee reports (Sacramento Bee, 9/19). ERISA gives states authority to regulate insurance but stipulates federal regulation of employee benefits (California Healthline, 9/17). "This state law is a sophisticated approach to get coverage for working families that could help millions of uninsured Americans," Gerry Shea, head of government affairs for the AFL-CIO, said, adding, "We are putting major legal resources into this fight." However, the U.S. Chamber of Commerce has said that SB 2 would cost businesses billions of dollars if enacted and is consulting its lawyers about the legislation. According to Kate Sullivan, director of health policy for the group, a legal victory for California would "blow right out of the water any argument that employers have a choice about whether or not they want to offer health insurance as a benefit." Recently, the U.S. Supreme Court has "shifted toward championing states' rights in ERISA cases," including a unanimous decision earlier this year that upheld a Kentucky law that allows patients to seek treatment form doctors outside of their health plan networks, the Bee reports. "In recent years, the justices have been pretty willing to cut states some slack with ERISA, but this California law is asking for much more slack than any of the others the court upheld," Wendy Mariner, a health law professor at Boston University, said (Sacramento Bee, 9/19). KQED's "This Week" Friday discussed SB 2 with KTVU consumer reporter Tom Vacar (Davis, "This Week," KQED, 9/19). The full segment will be available online in RealPlayer a few days after the broadcast.
A group of business leaders and small business owners Thursday urged Gov. Gray Davis (D) to veto SB 2 because they said the bill would lead to layoffs and force some businesses to relocate out of state, the Sacramento Bee reports. "Workers and California's economy cannot stand any more cost-increasing legislation," Allan Zaremberg, president of the California Chamber of Commerce, said. Davis has not said if he will sign the bill (Chan, Sacramento Bee, 9/19).
While every Californian should have health insurance, the state "keeps dealing with the problem in small bites," a Sacramento Bee editorial states. Bills like SB 2 and programs like Medi-Cal "threaten to overwhelm California families with questions about who is eligible for what and to create harmful consequences," the editorial states, adding that working families "will need a mastery of health policy to capture the right insurance as [the family] moves around the state, changes jobs or sees its income dive or rise." The "sensible way" to have universal coverage is to require every state resident to maintain basic health insurance and then subsidize those who need help buying it, according to the editorial. However, "sensible universal coverage has been a political nonstarter because it shifts responsibility to the individual and puts a direct budget cost on paying for the uninsured," the editorial states. "Liberals would rather perpetuate the political illusion that financing health care is somebody else's problem, especially that of business," the editorial adds, concluding, "It is everyone's problem. And we won't solve it with patches" (Sacramento Bee, 9/22).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.