Sacramento Bee Examines Unclear Issues in Employer-Sponsored Coverage Bill

The Sacramento Bee today examines the "three great unknowns" about a bill (SB 2) that would require California employers to provide health insurance to employees or pay into a state fund that would provide such coverage (Rapaport, Sacramento Bee, 9/12). The measure 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 20 to 49 workers would be exempt from the law unless the state provides tax credits to offset the cost of health benefits, and those with 20 or fewer employees would be exempt from the law. The bill would cap employee contributions to premiums at 20% (California Healthline, 9/11). In addition, low-income workers would pay no more than 5% of their wages for health coverage. If enacted, the bill would extend health coverage to more than one million uninsured state residents the Bee reports.

While the debate over the bill has centered on the cost to businesses that would provide coverage, "[e]qually important to the cost of health care in California" is the design of the state fund that would cover workers whose firms do not provide coverage, according to the Bee. The three unknowns about the pool -- the number of insurers that would choose to offer coverage through it, the rates those insurers would charge the state and the fees that the state would then charge firms to join -- all affect the cost of the pool and its influence on prices in the private insurance market, the Bee reports. For example, the Bee reports that if the fees were set statewide, the pool could end up with regional pricing problems similar to those experienced by CalPERS, which charges members the same premiums for the same benefits statewide. However, because insurance costs are lower in Southern California and in many cities than they are in Northern California and in rural areas of the state, organizations representing about 47,000 members -- almost all in Southern California -- left the health program in response to CalPERS officials' announcement of HMO premium increases averaging 18% because less expensive insurance was available outside of the pool. The desertion of so many members left CalPERS with a smaller insurance pool and larger percentage of members who cost more to cover. NPR's "Morning Edition" today reported on health care reform efforts in California. The segment includes comments from Richard Costigan, a lobbyist for the California Chamber of Commerce; Jamie Court, director of the Foundation for Taxpayer and Consumer Rights; Karen Davis, a health care economist with the Commonwealth Fund; and Anthony Wright, executive director of Health Access (Neighmond, "Morning Edition," NPR, 9/12). The full segment is available online in RealPlayer.