USA Today Examines Potential Effect on Small Businesses of Employer-Sponsored Health Coverage Law

USA Today on Friday examined the effect on small businesses of a law (SB 2) that will require some California businesses to provide health insurance to employees (Hopkins [1], USA Today, 6/4). In October, former Gov. Gray Davis (D) signed a bill set to take effect Jan. 1, 2006, that will require some employers in the state to either provide health insurance to employees or pay into a state fund that would provide such coverage. The law requires 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 will have to offer health insurance to employees only by 2007. Employers with fewer than 20 workers will be exempt from the law, and those with 20 to 49 workers are exempt from the law unless the state provides tax credits to offset the cost of health benefits. The law is being challenged by a ballot initiative in November sponsored by the California Chamber of Commerce (California Healthline, 6/1).

While the political battles over small business health care costs are "waged nationwide," the SB 2 debate "is getting extra attention because California often spawns trends that spread nationwide," according to USA Today (Hopkins [1], USA Today, 6/4). The Stop the Healthcare Tax -- a coalition of business groups that includes the National Federation of Independent Business and the California Retailers Association -- said that it plans to spend up to $15 million to defeat SB 2 in the November ballot initiative. Coalition member Sam Manolakas, president of the Sacramento-area restaurant chain Brookfields, said that SB 2 would add as much as $1.3 million annually to the $60,000 per year he currently spends on health care for employees. Manolakas added that he would have to cut his current workforce of 280 to below 200 to avoid covering dependents if the law survives the November ballot (Hopkins [2], USA Today, 6/4). Manolakas said that the problem with SB 2 is that it does nothing to control increasing health care costs, USA Today reports. The California Labor Federation, an affiliate of the AFL-CIO that supports SB 2, said that defeat of the measure could set a national precedent, stating, "A 2004 loss would give businesses in California and across the nation the confidence to continue attacking and repealing health care for working families." The USA Today article also examines other legislative action taken by state and federal lawmakers this year to address the issue of small businesses' health care costs (Hopkins [1], USA Today, 6/4).

The California Chamber of Commerce says it is prepared to spend at least $15 million to repeal SB 2, KPBS' "KPBS News" reports. The segment includes comments from Anthony Wright, a spokesperson for the consumer advocacy group Health Access California, which this week began the first part of a $15 million campaign against a referendum to repeal SB 2 (Goldberg, "KPBS News," KPBS, 6/2). The complete transcript of the segment is available online. The complete segment is available online in RealPlayer.

Additional information on SB 2 is available online.