Healthcare Law’s Foes Doctor the Facts

One of the drawbacks of California’s system of ballot-box legislating is that special interests keep trying to swing elections by misrepresentation, backed up with stupefying wads of cash.

Today’s exhibit: the so-called Coalition of Californians Against Government Run Healthcare, a front for the California Chamber of Commerce and a couple of other employer lobbies. In announcing last week that its referendum to repeal the state’s new healthcare law -- requiring medium-sized and large firms to offer workers medical insurance at least partially paid by the company -- had qualified for the November ballot, the coalition prominently listed among its backers a Los Angeles human rights organization.

It might strike some observers as odd that any human rights group would oppose the expansion of medical insurance in the workplace. Because the coalition failed to identify fully the Citizens Commission on Human Rights in its press release, it falls to me to do so: This is a group associated with the Church of Scientology.

Of course, Scientologists, controversial though they may be, have as much right as anybody to take a position on matters of public policy. And the commission is candid about its beef with the health bill: It considers psychiatry a fraud and resents forcing employers to pay for it through mandated insurance.

But is the business coalition being so honest?

Frank Schubert, the Sacramento public relations man who is running the referendum campaign for the chamber and its partners, says he wasn’t aware of the commission’s affiliation and doesn’t know why it was singled out for mention in the release. Only a cynic, I suppose, would conjecture that the coalition listed a “human rights” agency among its supporters so it could pretend that opposition to the new law arises from bighearted, humanitarian concerns rather than narrow commercial interests.

On the other hand, this wouldn’t be the first time that the coalition has shaded facts about the healthcare law.

Known by the legislative shorthand SB 2, the law requires businesses with 200 or more employees to provide health coverage for workers -- including some part-timers -- and their dependents and to pay at least 80% of the premiums, starting in 2006. Firms with 50 to 199 employees will be required to cover the workers only, starting in 2007. Those with 20 to 49 workers will come under the latter mandate only if the state enacts a tax credit for 20% of the employers’ share, a subsidy that doesn’t seem in the cards right now. Companies with fewer than 20 employees are exempt.

Employers who choose not to meet the requirements through their own health plans must pay into a state pool that would buy the coverage.

The law’s goal is to reduce California’s medically uninsured population, currently 6.5 million. The hope is that by transferring about 1 million of these individuals from public programs to employer plans, the law will ease the enormous strain placed by the uninsured on public emergency rooms, Medi-Cal and the workers’ compensation system. (Healthcare experts say uninsured workers sometimes claim that their injuries are work-related to get free treatment.)

That means that some costs imposed on employers by SB 2 may be compensated for by savings in taxpayer-financed medical programs. Supporters also contend that the mandate will level the playing field between employers that offer workers reasonable health coverage and those that weasel out of the obligation. (This means you, Wal-Mart.)

Estimates of SB 2’s cost and economic effect have been all over the map. The coalition’s own estimate that SB 2 would saddle Californians with $7 billion in additional costs -- $5.7 billion on employers and the rest on workers -- is based on a shell game. Its figures come from a September 2003 study it commissioned from the Los Angeles County Economic Development Corp.

But one author of the LAEDC study says those were rough calculations, and the LAEDC now estimates net new expenses, counting tax deductions the employers would receive, at much less -- $4.7 billion, of which the employers’ share would be $2.2 billion, or less than half the original figure.

The coalition hasn’t released the new LAEDC study, contending that it’s not ready for public dissemination. But it’s had it in hand for weeks, which raises the question of why it’s still posting outdated, inflated figures on its website. Could it be because the old numbers are so much scarier?

The Chamber of Commerce, meanwhile, relied on the old figures to label the bill a “job-killer.” Never mind that firms smaller than 50 workers won’t be affected for years, if ever. As is typical for a Sacramento business lobby, the chamber hasn’t proposed an alternative plan for reducing the ranks of the medically uninsured; it’s just determined to kill this one.

The chamber and the referendum campaign are also trying to stack the electoral deck against the law with some familiar rhetorical tricks, such as misrepresenting SB 2 as a “tax,” a word that always gets a rise out of California voters. The coalition’s very name, by alluding to “government-run healthcare,” is a distortion.

“I don’t understand how anyone can call it government-run healthcare,” says E. Richard Brown, director of the UCLA Center for Health Policy Research.

Brown notes that the insurance available through the shared pool would be purchased by the Managed Risk Medical Insurance Board, but the government panel wouldn’t dictate the terms of coverage or act as SB 2’s enforcement agency.

Another key question is how widespread the opposition to SB 2 really is. The coalition claims to represent a large group of “diverse business interests.” But just how diverse?

All but about $15,000 of the $2.5 million the coalition raised before its last full financial disclosure report in January came exclusively from two business sectors with lots of part-time workers who might qualify for coverage under the law: chain restaurants and department stores. McDonald’s Corp. franchisees alone accounted for roughly 200 of the 384 reported individual donations, which suggests that some sort of directive from the home office arrived one day, perhaps packed in with everyone’s shipments of all-beef patties and special sauce.

Schubert told me that the donor list was initially skewed toward the restaurants and retailers (Federated Department Stores Inc.’s Macy’s unit, Target Corp. and Sears, Roebuck & Co. are big contributors) because they were willing to prime the campaign money pump early on. He says the support will eventually broaden because SB 2 was so sloppily drafted that no sane business owner could condone its survival.

But the truth is that employers potentially most affected by SB 2’s mandates tend to resemble those financing the campaign thus far -- “businesses that provide healthcare to a small share of their workers and whose benefits are stingy,” as UCLA’s Brown puts it.

Not even all of SB 2’s supporters believe the law is perfect. Many concede it needs patching to fix flaws and resolve ambiguities. The Chamber of Commerce could have performed a real public service -- a true human rights initiative -- by helping to craft a better solution to the problems of California’s uninsured. Maybe the chamber will apply itself to that task, once it has repealed this law through its misinformation campaign. But I wouldn’t count on it.

Golden State appears every Monday and Thursday. You can reach Michael Hiltzik at golden.state@latimes.com and read his previous columns at latimes.com/hiltzik.