CMA Campaigns for Gov. Davis'
Signature on Health Care Measure
Posted [09/16/03]

The Health Care for Working Families Act (SB 2), co-sponsored by CMA and the California Labor Federation, AFL-CIO, requires medium and large employers to provide their employees with basic health coverage or pay into a purchasing pool through which uninsured workers could obtain coverage.

This historic piece of legislation is being inaccurately portrayed by the California Chamber of Commerce and in some media reports as bad for the state’s economy and unfair to small business. SB 2 is actually a moderate and reasonable step that would affect less than 5 percent of California employers, while providing health coverage for 1.3 million uninsured.

“This landmark legislation is fair and prudent,” says CMA president Ronald Bangasser, M.D. “It provides needed and constructive change at a reasonable cost and is a first step toward providing health care coverage to some of California’s 7 million uninsured.”

Small businesses with fewer than 20 employees are entirely exempt from this legislation. SB 2 will require businesses with 200 or more employees to provide health insurance for employees and their dependants beginning in 2006. Businesses with 50 to 199 employees will be required to provide coverage for employees, but not for dependants, beginning in 2007.

Businesses with 20 to 49 employees would be exempt unless the legislature passes another law authorizing a 20 percent health-care tax credit for these businesses. If a tax credit were approved, these businesses would be required to provide coverage in 2007, bringing to 1.6 million the number of uninsured covered under this legislation.

Basic health insurance premiums for an individual are approximately $200 per month per employee. Under this legislation, the employee is responsible for 20 percent of this premium. Factoring in current federal and state tax deductions for businesses who provide health insurance brings the “real cost” to employers to $80 per month per person, or less than $1,000 a year.

CMA estimates that these “real costs” will total about $1.3 billion for businesses who do not currently provide coverage. This program is expected to provide at least that much in savings in lower health insurance premiums and state taxes. Health insurers estimate that 15 percent of premiums pays for the cost of providing care to the uninsured, while lack of access drives up the cost of care for the uninsured.

“Every day I see the effects that being uninsured has on the health of Californians who show up in my wound care clinic sicker than they should be,” says Dr. Bangasser. “I see first hand how this increases costs and how these costs are passed on through premium increases to businesses who do provide health coverage.”
This legislation is also expected to provide $700 million in savings to the state’s Medi-Cal system and reduce inappropriate use of emergency rooms and the workers’ comp system by workers who lack health insurance.