Bill Requiring Small Firms to Provide Health Coverage Gains

Times Staff Writer

The Assembly on Monday passed a major health insurance bill sponsored by Speaker Willie Brown (D-San Francisco) that would require businesses with more than five workers to provide insurance coverage for their employees.

The 41-to-34 vote--the bare minimum required for passage--sent the bill to an uncertain fate in the Senate, where business groups are expected to lobby heavily against the measure.

Brown described his bill as "a very small step" toward the provision of health insurance for every Californian. But Republican opponents said the legislation would hinder creation of small businesses by imposing an additional burden on fledgling companies least able to afford it.

Coverage After 3 Months

The measure would apply to any California business with more than five employees working at least 87 hours a month, or about 20 hours a week. Companies would have to provide the insurance to workers who had been on the job for at least three months.

Employers would be responsible for 75% of the insurance policy's cost. They could deduct the balance of the premium from their employees' paychecks. The bill would require businesses to continue providing insurance for up to three months after an employee became hospitalized or disabled.

The insurance policies would have to include hospital, surgical, mental health and maternity coverage, a package Brown estimates would cost about $85 per employee each month.

Brown's plan, which would need a change in federal law to take effect, is modeled after Hawaii's health insurance statutes. Brown said he would work toward a change in the federal law if the bill is approved. The Hawaii plan, which Congress exempted from the federal ban on such measures, applies to any business with one or more employees.

"We are the only industrialized nation in this world that will not cover adequately the health care of all its citizens," Brown said. "This is a very small step. It is a step we ought to take. It is a step we should have taken a long time ago."

'Least Worst' Solution

Assemblyman Bruce Bronzan (D-Fresno), chairman of the Assembly Health Committee, described Brown's bill as the "least worst" solution to an "outrageous" problem. Bronzan said lower-income workers without insurance tend to delay basic health care until they have an emergency, which leads to higher medical costs that must be borne by taxpayers.

"It is not the answer," Bronzan said of the legislation. "It deals with a piece of the problem. But right now we have no practical alternative."

Republicans, who voted in unison against the measure, complained that Brown's proposal would place an unfair burden on business owners. Workers would suffer in the end because fewer businesses would mean fewer jobs, they said.

Assemblyman Eric Seastrand (R-Salinas) contended that more than 80% of California's jobs are created by small businesses with 20 or fewer employees.

"Very few people in this chamber really understand what it takes to start up a new business," Seastrand said. "This bill's mandate . . . will have nothing but a detrimental effect."

Impact on Employers Cited

And Assemblyman Gil Ferguson (R-Newport Beach) complained that the state's "economic engine" would grind to a halt if the Legislature continued to "pile every cost imaginable" on California employers.

But Brown shrugged off the criticism, insisting that most businesses already provide insurance and that new businesses usually have fewer than five employees and would therefore be exempt from the bill. He did agree to consider amendments that would exempt all companies that have not been in business at least five years.

Brown said he had not yet discussed his bill with Republican Gov. George Deukmejian. He said he would do so "at the appropriate time." Deukmejian's office said the governor had no position on the bill.

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