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Worker's Health Insurance Bill Benefits Argued

by Kenny Goldberg
Oct 01, 2003

One of the most controversial bills awaiting action by California Governor Gray Davis, would require businesses to provide health insurance for their employees. The California Chamber of Commerce calls the measure a job killer, and says it would drive companies out of the state. But public health advocates say it's about time more businesses ponied up for their workers' health insurance. KPBS Health Reporter Kenny Goldberg has the story:

It's lunchtime at Sammy's Wood Fired Pizza in Mission Valley.

Business is good at this restaurant, and at the nine other Sammy's locations in San Diego County. The company operates an additional eight eateries in other parts of Southern California. All told, the company has 500 hourly workers, none of whom get benefits.

The pending bill, SB-2, would require businesses of Sammy's size to provide health insurance for all of its full-time employees, and their dependents. By law, companies would have to pay at least 80% of the premium.

Sammy's vice president Tom Penn says that would cost them $2 million a year.

"That's just not gonna happen. I mean, if it did happen it would just be passed on to the people dining in the restaurants somehow. But we wouldn't be able to swallow that kind of bill."

If the bill becomes law, it would be phased in over the next four years, and would effect companies differently, depending on their size. Businesses with 200 workers or more would have to offer employee and dependent coverage. Companies with 50 to 199 employees would only have to pay for their workers' health insurance. As an alternative, firms could pay into a special state fund for the uninsured. That amount has yet to be determined.

Either way, the California Chamber of Commerce says the bill would be a disaster.

"Given California's current economic climate, the increases we've seen in worker's comp, the increases we're seeing in unemployment insurance, this bill is a barrier to job creation and job retention in California."

Richard Costigan is the Chamber's vice president of government relations. He argues the measure would kill California's competitive edge.

"As a California employer, just the cost of one employee would be 2000 more than in the state of Nevada, or Arizona, or Florida or Utah for that matter, why would you look at expanding here? That's the problem. It does create a competitive disadvantage."

Not surprisingly, the author of SB-2 doesn't see it that way. Senate president pro-tem John Burton says his measure makes economic sense.

"It saves money for the state of California, saves money for County government, and helps level the playing field for those responsible businesses that do provide health coverage for their workers."

In fact, the business community is not uniformly opposed to SB-2. A recent survey from the Institute for Labor and Employment at UC Berkeley bears this out.

More than six out of ten companies polled were in favor of employer-mandated health insurance. What's more, the survey found less than a quarter of California businesses would see an increase in operating costs of more than 1%.

Beth Kapell is with Health Access, a non-profit group that's lobbied hard for the measure's passage. She says the bill would remove about one-million people from the state's uninsured rolls. Kapell believes that would be good for California's economy.

"People who have health insurance don't face tens of thousands of dollars of bills from hospitals and doctors, and they're able to go out to the mall and buy new stuff, and buy new cars, and spend on restoring the economy."

Supporters of the measure point out most mid-sized and large companies in the state already provide health insurance to their workers. And because the bill only covers businesses with over 49 employees, the vast majority of California firms would be exempt.

Jamie Court directs the Foundation for Taxpayer and Consumer Rights. He thinks the measure is a good idea. But Court says it's missing an important element.

"If you're gonna require that all employers in the state over a certain size pay for health coverage, and coverage costs are exploding, it's a good idea to regulate the costs of that coverage. And we're hoping that the governor will sign this bill because that will mean that in the coming three, four years before implementation of the plan, there will be some new cost controls on the industry."

Governor Davis is under enormous political pressure from Democrats, doctors groups, and labor leaders to sign SB-2. At the same time, he's being barraged by the Chamber of Commerce to veto it. And the recall election adds even more fuel to the fire on both sides.

The Davis Administration has given input to the measure along the way. But the governor says he hasn't taken a close look at the final version. Nonetheless, Davis says he'll act on it before next Tuesday's election.

Kenny Goldberg, KPBS News.