Success of Proposition 72 Could Determine Other States’ Actions
Proposition 72 -- a referendum on the Nov. 2 statewide ballot that asks state residents to vote "yes" to uphold or "no" to repeal a law (SB 2) on mandatory employer health coverage -- could have "national reverberations," the Los Angeles Times reports (Rau, Los Angeles Times, 10/16).
Under the law (SB 2), which is scheduled to take effect Jan. 1, 2006, employers with 200 or more employees will be required to provide health insurance to workers and their dependents by 2006 or pay into a state fund to provide such coverage. 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, 10/15).
Some analysts say that the referendum could "provid[e] a clue to the American appetite for ambitious rejiggering of a health care system widely acknowledged to be a mess," the Times reports.
Similar measures have generally been "political poison" in other states, the Times reports. For example, measures on employer-sponsored health coverage in Massachusetts, Oregon and Washington state in the late 1980s and 1990s were "dismantled" before they took effect, according to the Times.
Harvard School of Public Health professor Robert Blendon said, "Everybody is watching California. If [SB 2] goes under in California, it's just going to say that there's not a will out there to ask employers to contribute, and all that's left is tiny tax credits and expanding children's coverage. If it goes down, for a decade it won't show up on anybody's political policy agenda." Blendon added, "If California hangs in, I think you'll see other states and future candidates nationally asking for employer contributions."
According to the Times, Proposition 72 does not address "two endemic problems: the growing cost of medical care and the lack of insurance for self-employed people and those at small companies that are not covered by the proposition." However, supporters of the measure, which include members of the California Medical Association and consumer and labor groups, say SB 2 could "settle the crucial political question of whether Californians embrace the notion that employers are responsible for health care and should be held accountable to provide it," the Times reports.
Some supporters of the law also say that smaller businesses could decide to transfer workers with expensive health care needs to the state-run fund, although they say such a problem could be avoided "by careful management and by future legislation," according to the Times.
Opponents of the measure, which include the California Restaurant Association and other business organizations, say that the requirements will cause many businesses to leave the state. Opponents also say that the exemption for the smaller employers would put larger companies at a disadvantage.
Jot Condie, president of CRA, said, "We've estimated that over 20% of our membership goes out of business the first day this takes effect."
Independent analysts "question some of the dire assertions by business groups," the Times reports.
Richard Kronick, a professor of health and family medicine at University of California-San Diego, said, "In a lot of ways it's much more modest than initiatives of the past. It will likely have some effect on employment in the economy, some positive and some negative. The net effect is likely to be extremely small, so small as to be barely measurable by the labor economists. What will certainly be measurable is a million more people with health insurance" (Los Angeles Times, 10/16).
Members of health, labor, civil rights and religious organizations on Thursday held a rally outside St. Joseph Medical Center's emergency department encouraging state residents to uphold SB 2. Michael Herrera, St. Joseph's ED director, said that people without health insurance "identify the ER doc as their regular doctor," and as a result, "emergency departments are skyrocketing with patients" (Goldeen, Stockton Record, 10/15).
Three newspapers recently published opinion pieces addressing Proposition 72. Summaries of the opinion pieces appear below.
- Bill Goodrich, Orange County Register: The impact of businesses that choose to pay into the state fund rather than provide health insurance under SB 2's "pay-or-play" system "could be devastating," Goodrich, president and CEO of the United Agribusiness League, writes in a Register opinion piece. Among the effects, the "immediate disadvantage is moving workers from their employer-sponsored health care plan -- with some level of choice -- to a state-run plan with little choice," Goodrich continues. Another "real concern" is SB 2's impact on workers' jobs because the measure will "add to the cost of firms doing business in the state," and some employers will respond by "automating, outsourcing and/or relocating," according to Goodrich. He concludes, "Californians will lose jobs," and "SB 2 will increase the ranks of the uninsured" (Goodrich, Orange County Register, 10/17).
- Daniel Weintraub, Sacramento Bee: Proposition 72, although "well-intentioned," would "do nothing to slow the rising cost of health insurance, and in fact would quicken the pace of health care inflation," columnist Weintraub writes in a Bee opinion piece. According to Weintraub, "the best way to get health care costs under control is to put the people who ultimately pay the bills -- us -- back in the driver's seat." Weintraub writes that a policy should be implemented that requires state residents to provide their own coverage for catastrophic costs, a strategy that has "proven successful in Switzerland." Weintraub concludes, "Proposition 72 seeks to further the pretense that employers, not employees, pay for health care. In doing so it would make a bad problem even worse" (Weintraub, Sacramento Bee, 10/17).
- Richard Corlin, Sacramento Bee: SB 2 "is the only proposal on the table" that deals with the "meltdown" of rising insurance premiums, overburdened emergency departments and uninsured working families, Corlin, a past CMA president, writes in a Bee opinion piece. "You'll not find one solution to the crisis" in any material released by those who recommend repealing SB 2, Corlin continues. "If there were an easy solution, someone would already have proposed it. The choice is between the meltdown status quo and Proposition 72's solution," according to Corlin. He concludes that upholding SB 2 is "a welcome step in the right direction" (Corlin, Sacramento Bee, 10/18).