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Legislature Passes Bill Requiring Many Companies to Provide Insurance

Spectrum staff and wire

California would become the fourth state in the country to require employers to offer their workers health insurance under a bill on Gov. Gray Davis’ desk.

The bill by Senate President Pro Tem John Burton, D-San Francisco, spurred long debates before passing the Senate on Sept. 12, 25-14, and the Assembly early Sept. 13 — the last day of this year’s legislative session — on a vote of 46-31.

During a town hall meeting Wednesday night, Davis indicated support for the concept of extending health insurance to more workers but avoided committing to signing or vetoing Burton’s bill.

If the bill is signed, California would join Hawaii, Washington and Oregon as states with similar employer-mandated health insurance systems.

The bill could give up to 1.2 million workers and their families health insurance through a plan that would be financed mostly by employers.

“Tonight we have a chance to do what has been talked about since Earl Warren was governor in 1953,” Assemblyman Dario Frommer, D-Los Angeles, said during an Assembly floor debate.

The bill would require companies with more than 200 employees to begin offering health benefits by 2006. Smaller companies with more than 20 employees would have until 2007 to offer coverage, but companies with 20 to 49 workers would have to provide health insurance only if the Legislature also passed a 20 percent tax credit for those firms.

Republicans opposed the bill, saying it was a bad time to put another mandate on struggling businesses. They suggested it would drive up health care costs and trigger unintended consequences similar to the state’s experiment in energy deregulation. The expense would drive companies to neighboring states, many Republicans said.

Sen. Rico Oller, R-San Andreas, said the bill would force businesses to lay off workers to skirt the law.

“If they have 23 employees, they’ll have 19 next year to get around the requirement,” Oller said.

Sen. Jackie Speier, D-South San Francisco, said most companies in California already provide health insurance coverage to their workers.

“It affects only 5 percent of the employers in the state of California,” she said. “It will provide savings to businesses already providing health insurance.”

About 6.3 million Californians — a fifth of the population — lack health insurance. Backers of the legislation say only Texas and New Mexico have higher percentages of uninsured residents.

Uninsured people often delay health care, resulting in more severe illnesses and more expensive medical services, Speier said. Those costs are shifted to those paying for insurance — such as businesses.

The measure would also save businesses money by not having to insure as many spouses, who could get coverage from their own jobs, Speier said.

Assemblywoman Cindy Montanez, D-San Fernando, asked fellow lawmakers to remember times in their lives when they didn’t have health insurance, “when your mother or father was sick and didn’t go” to the doctor.

“Remember how frightening that was,” she said.

The measure is opposed by the California Chamber of Commerce and other business organizations, which warn that it would cost too much and would stifle job growth.

“This is the last thing that California’s economy needs,” Chamber of Commerce President Allan Zaremberg said. “SB 2 mandates a $5 billion increase in health insurance costs on employers while doing nothing to make health care more affordable.”

Many labor unions support the bill. AFL-CIO President John Sweeney said SB 2 would be “one of the most significant pieces of legislation to expand health care benefits since the passage of Medicare.”

Sweeney dismissed the cost to businesses, saying, “Employers will benefit with a healthier and productive workforce and the costs to businesses will be minimal with tax write-offs and subsidies provided for health care expenses.”