Governor, Brown Strike Deal on Health Insurance

SACRAMENTO —  Gov. George Deukmejian and Assembly Speaker Willie Brown (D-San Francisco) tentatively agreed Wednesday on a proposal to induce, rather than require, California employers to provide health insurance for their workers.

If the accord can be translated into legislation and passed by lawmakers before they adjourn for the year Friday night, it could lead to basic health insurance for as many as 1 million of the state’s 2.5 million workers who are not covered by any plan, Brown said.

The proposal--which relies heavily on tax credits for employers--is attractive to the Republican governor because it would not place an additional financial burden on the business community, which has strenuously opposed the idea of requiring companies to provide the coverage, said gubernatorial chief of staff Michael R. Frost.

“We believe it is in the best interests of the state and the people to have employers providing health insurance,” Frost said. “We think this is the best way to do it.”

The key to the agreement was Brown’s decision to drop his proposal, already passed by the Assembly, to require companies with five or more full-time workers to provide their employees with basic health insurance coverage. Although Deukmejian, according to Frost, does not personally oppose such a requirement, he could not support it in the face of the business community’s opposition.

Brown said he agreed to settle for less when he saw that it was clear he could not overcome Deukmejian’s resistance. “I will take what I can get,” he said in an interview.

Aides to Deukmejian and Brown on Wednesday afternoon began fleshing out the details of their bosses’ agreement.

‘Conceptually Agreed’

“The governor and the Speaker have conceptually agreed to that approach, and the question really is: In the next couple of days can we put it into a form where it is workable and get the necessary votes in each house to pass?” Frost said.

Under the plan, the cost of the insurance, which Brown’s staff estimates would be about $100 a month for each worker, would be divided among the employees, their employers and state taxpayers.

Workers would pay 25% of the premium, and employers would pay the other 75%. But companies with 25 or fewer employees could recover 25% of the premium’s cost in the form of a tax credit. Some of the money the state loses through the tax credit would be recovered by savings in programs--such as Medi-Cal--that provide care to people who are not covered by insurance.

Brown said he intends for the employers to be able to cover their entire share of the premium by claiming the tax credit and deducting the premium as a business expense. But Frost said the governor so far has agreed only to a $25 per employee credit, which would fall well short of covering the entire cost of the insurance.

Although business community representatives say that even a basic insurance policy would cost more than $100, the proposal contains two provisions to make the cost of the coverage affordable.

One would make it easier for small firms to join together to purchase the coverage, giving them the same price advantage large corporations enjoy when they buy group policies for their workers. The other provision would provide a mechanism to cushion insurers against the possibility of exorbitant claims from workers who suffer catastrophic injuries or illness.