Schwarzenegger Recommends That Voters Reject Employer-Sponsored Health Coverage Law
Gov. Arnold Schwarzenegger (R) on Friday announced he would recommend that state residents vote "no" on Proposition 72, a referendum on the Nov. 2 statewide ballot that allows voters to uphold or reject a law (SB 2) that will require some employers to provide health insurance to their employees or pay into a state fund to provide such coverage, the Los Angeles Times reports (Rau/Lifsher, Los Angeles Times, 9/11).
SB 2, which is scheduled to take effect Jan. 1, 2006, will require employers with 200 or more employees to provide health insurance to workers and their dependents by 2006 or pay into the state fund. Employers with 50 to 199 employees will have to provide health insurance only to workers by 2007. Companies with fewer than 20 workers will not have to comply with the law, and the law also will exempt employers with 20 to 49 workers unless the state provides them with tax credits to offset the cost of health coverage (California Healthline, 8/10).
Schwarzenegger in a statement said, "Achieving improved health care access and affordability for all working Californians is a positive goal. However, we must find a better way than doing so at the cost of putting employers out of business. Well-intentioned as it may be, Proposition 72 will only reverse California's recovery and trigger an exodus of jobs from the state" (Los Angeles Times, 9/11).
Allan Zaremberg -- president of the California Chamber of Commerce, which also asks voters to vote "no" on Prop. 72 -- said, "By opposing the multibillion dollar health care mandate, the governor continues to highlight his commitment to the state's jobs climate" (Marimow, San Jose Mercury News, 9/11).
Chamber officials said that Schwarzenegger's statements underscored his commitment to "put job creation and economic reinvigoration at the top of his agenda," according to the Sacramento Bee (Delsohn/Talev, Sacramento Bee, 9/11).
Jamie Court, president of the Foundation for Taxpayer and Consumer Rights, said, "Gov. Schwarzenegger owes the public an explanation of what he will do to help those who cannot afford health insurance if he is to oppose a common sense proposal already in place in Hawaii. Schwarzenegger needs to think more about the plight of patients and less about the big corporations that are shifting increasing burdens for health care costs onto employees and patients."
Senate President Pro Tempore John Burton (D-San Francisco), who sponsored SB 2, said, "I'm very disappointed that the governor is playing 'girlie man' for the Chamber of Commerce." Burton said that he had lunch with Schwarzenegger on Thursday and that he "did not have the ... courtesy" to mention his intention to oppose Proposition 72. Burton said, "He broke bread with me yesterday and broke my heart today" (Los Angeles Times, 9/11). Burton added, "He was elected by the Chamber of Commerce, and now he's doing the Chamber of Commerce's bidding" (Sacramento Bee, 9/11).
Some people familiar with the issue said that Burton and Schwarzenegger made an agreement that Burton would convince the state Democratic Party to support the governor's $15 billion bond and balanced budget measure last March and that the governor would not get involved in the effort to repeal SB 2. Burton on Friday said that the governor never made such a promise (San Jose Mercury News, 9/11).
According to the Bee, Schwarzenegger's position on Proposition 72 "gives the chamber and other campaign backers a powerful boost because they'll be free to reproduce his comments and media coverage in advertising and other venues once the campaigns heat up" (Sacramento Bee, 9/11).
Schwarzenegger's aides said it is unlikely the governor would take an active role in the campaign by making contributions or appearing in commercials. However, Schwarzenegger's "popularity could affect public opinion and will certainly draw more attention to two issues that so far remain largely unknown to voters," according to the San Francisco Chronicle (Martin/Gledhill, San Francisco Chronicle, 9/11).
Marty Wilson, Schwarzenegger's chief fund-raiser, said that the governor has not decided whether to actively campaign against Proposition 72 because his top priority is defeating two gambling initiatives (San Jose Mercury News, 9/11).
Schwarzenegger on Friday also endorsed Proposition 64, an initiative that would restrict lawsuits under the state's unfair competition law (Los Angeles Times, 9/11). California's Unfair Competition Law is the only consumer protection law in the United States that allows people to sue companies even when the plaintiff has not been harmed personally. Proposition 64 would limit lawsuits to people who can prove a loss of money or property as a result of the companies' actions. It also would make it more difficult for individuals to file lawsuits aimed at obtaining court orders to halt particular business practices statewide.
Supporters of the ballot initiative, including Kaiser Permanente and Blue Cross of California, say their efforts are intended to help prevent frivolous and costly lawsuits. However, consumer groups say that the supporters of Proposition 64 are seeking to take valuable protections away from California residents (California Healthline, 8/10).
Schwarzenegger said, "Proposition 64 will stop the legal practice of shakedown lawsuits, in which private lawyers file suits without any client or any evidence of harm. This turns lawyers into bounty hunters, stalking innocent small businesses that create jobs and opportunity in California" (Los Angeles Times, 9/11).
The chamber called Schwarzenegger's endorsement of Proposition 64 "the fulfillment of another promise he made during the campaign that [he] will boost California's business climate," the Bee reports (Sacramento Bee, 9/11).
John Sullivan, president of the Civil Justice Association of California and co-chair of the campaign in favor of Proposition 64, said, "This will make a significant difference. It shows that our proposal fits the broader plan to restore California's economic strength."
Environmentalists, who have filed suits under the competition law to supplement enforcement by government officials, said they felt betrayed by the governor because three weeks ago he assured them that he wanted to amend the law through legislation, not referendum, the Los Angeles Times reports (Los Angeles Times, 9/11).
Court said Schwarzenegger "basically declared war on every public-interest group in the state. Proposition 64 is opposed by the American Lung Association, the AARP, the Sierra Club, the California Nurses Association and supported and funded by Exxon-Mobil, Citigroup and Pfizer" (Sacramento Bee, 9/11).
Although California is "shimmying toward a health care crisis because of ever increasing costs, shifting the burden of that crisis squarely on the back of the state's business community could reap disastrous results," a San Luis Obispo Tribune editorial states. State businesses should not be forced to provide health insurance any more "than they should be forced to provide their employees with food, housing or transportation," the editorial continues. The editorial concludes, "Prop. 72 is no cure. It may have been borne of good intentions, but its unintended consequences will seriously cripple this state's business community" (San Luis Obispo Tribune, 9/12).
Additional information on Proposition 72 is available online.