Health Care Reform
Bottom line message:
The CRA continues to seek workable solutions for covering California’s 6.4 million uninsured residents but remains strongly opposed to proposals that place the burden of providing coverage on employers. Currently there are six legislative proposals, four of which contain employer mandate/contribution provisions. These proposals seek to impose a mandate on employers to provide coverage without any attempt to address the affordability of health care. It is crucial we reframe the debate and seek to enact comprehensive reforms to address the real cost-drivers in the health care system and seek broad-based, shared solutions to provide coverage for the uninsured.
Background:
While providing universal health care coverage is a worthy goal, an employer mandate is not the solution. In addition to strong policy reasons, many of these types of proposals run afoul of federal law (ERISA) and may be improperly passed taxes. In 2003, the Legislature passed SB 2, an employer mandate that would have put many restaurants out of business. SB 2 was the wrong approach to the health care dilemma because it did nothing to control the rapidly increasing costs of health care and would have actually hurt workers and their families. Our industry responded with Proposition 72 and we were victorious overturning SB 2 in the November 2004 ballot. While the defeat of this measure was significant, the CRA agrees something must be done to improve access to care for the millions of uninsured, and is committed to helping achieve comprehensive reform to this end. This year has turned out to be the year of health care with the Legislature, the Governor and interested parties committed to finding a solution.
This year, the six proposals are:
Governor’s proposal: Imposes a pay or play system, requiring employers to provide coverage or pay a four percent fee to the state to provide that coverage through a health insurance pool. Requires all individuals to carry a minimum health insurance plan. Expands Healthy Family eligibility to 300 percent of Federal Poverty Level.
AB 8 (Nunez-D): Imposes a pay or play system, requiring employers to provide coverage or pay a fee to the state in the amount of a percentage of payroll. Requires workers to take up employer-sponsored coverage. Creates a health insurance pool, providing three benefit plans to enrollees. Expands Healthy Family eligibility to 300 percent of Federal Poverty Level and to childless adults.
SB 48 (Perata-D): Imposes a pay or play system, requiring employers to provide coverage or pay a fee to the state in the amount of a percentage of payroll. Establishes the Health Insurance Connector Pool to provide benefits to employees. Expands Healthy Families to 300 percent of Federal Poverty Level.
SB 236 (Runner-R): The Senate Republican-sponsored Cal-Care proposal that provides incentives for employers and individuals to purchase health care coverage. Provides incentive to employers to offer coverage, reforms the tax code to provide incentives to individuals to obtain coverage, reallocates “First Five” funds for children’s health care and increases Medi-Cal reimbursements. Does not contain an employer mandate.
Assembly Republican Plan: Eighteen-bill package designed to increase incentives and healthcare tax deductibility for employers and individuals to purchase health coverage. Increases Medi-Cal reimbursement levels and encourages competition among health plans. Does not contain an employer mandate.
SB 840 (Kuehl-D): Imposes a single-payer health care system. The state would collect premium and provide coverage through a government-run program, contracting directly with physicians and hospitals to provide services. The program would be financed through taxes on all individuals and employers.
Talking points:
The health care proposals with employer mandates being considered in California this year disproportionately impact small businesses. Restaurants are low-margin, labor-intensive businesses and, as such, take a bigger hit than high-margin businesses like law firms.
Many small restaurants earn between three and five percent net profit. That net profit constitutes a restaurateur’s income which means that this increase comes out of their livelihood. Restaurants across California recently absorbed a minimum wage increase. The lack of affordable health care is a societal issue, and any attempt to impose coverage mandates should be funded in the broadest possible manner.
The health care system is broken, much as the workers’ compensation system was several years ago. The employer mandate proposals being considered do nothing to control the rapidly increasing costs of health care. Health care costs continue to rise at nearly twice the rate of inflation, eight percent for larger employers in 2006 and nearly 11 percent for small businesses, forcing employers of all sizes to make difficult choices with regard to employee benefi ts. Clearly the cost of insurance is why many small employers cannot offer or have dropped coverage in the past several years.