Governor Signs Insurance Tax Credit for Businesses

Saying he was taking an important step toward providing health insurance for all working Californians, Gov. George Deukmejian on Monday signed legislation offering tax credits for small businesses that provide minimum medical coverage for their employees.

Deukmejian also signed a related measure that requires his Administration to study new ways of guaranteeing health insurance for the estimated 2.7 million employed Californians who do not have coverage.

Both measures stemmed from a compromise worked out between the Republican governor and Democratic Assembly Speaker Willie Brown of San Francisco.

But the legislation was denounced as too little, too late by two groups currently putting the finishing touches on their own health insurance proposals that they hope to submit to voters as ballot initiatives in 1990.

Deukmejian signed the bills in a friendly ceremony with Brown, who earlier this year proposed requiring all employers with five or more full-time workers to provide health coverage for their employees. Brown abandoned that plan in the face of strong opposition from Deukmejian and the business community.

Instead, Brown pared his bill down to a study of the health insurance issue and coupled it with a measure by Sen. Barry Keene (D-Benicia) to provide a 25% tax credit, beginning in 1992, to companies with 25 or fewer employees that provide a state-approved, basic health insurance policy for their workers. The credit, estimated to be worth a total of $300 million annually, will go to companies that are already providing insurance to their workers, as well as to firms that are not now offering coverage.

“I think most employers want to provide health care coverage,” Deukmejian told reporters after signing the bills. “The problem for a lot of small businesses has been the cost and the affordability. This is going to make it possible for them to offer that (coverage), and I think it is going to encourage a large, large number to do it.”

Brown said that he was “very proud” of his measure and added that he hoped the study would be complete in time to pass new legislation before Deukmejian leaves office at the end of 1990.

“I’d hate to have to retrain somebody else,” Brown joked in a reference to his relentless lobbying to get the conservative chief executive to support broadening the availability of health insurance.

One of the initiative proposals is being spearheaded by the California Medical Assn. and is similar to the original version of Brown’s bill, requiring most employers to provide insurance and establishing ways to make that insurance more affordable.

The other proposal is being drafted by Health Access of California, a coalition of labor unions, consumer groups and “public interest” organizations. It would guarantee insurance to every state resident and pay for it largely through a new tax on employers. The initiative would also allow the state to regulate the rates hospitals charge private patients.

Although the two groups differ on the best way to solve the problem, their representatives agreed Monday that the Keene and Brown bills fall far short of what is needed.

“It is a little late for the Legislature and the governor to do a whole lot,” said Jay Michael, a lobbyist for the medical association. “These bills are better than nothing. But I think it will be a fairly inconsequential dent in the problem.”

Lois Salisbury, chairwoman of Health Access, said the governor’s bill-signing ceremony amounted to “nice theatrics” but little more.

Salisbury argued that the 25% tax credit would not be sufficient to entice employers into providing insurance. The monthly cost of a basic policy has been estimated at between $100 and $300 or more.

“I don’t expect to see a big tide of change,” she said. “It is just too little to motivate them.”

The governor also took action Monday on these bills:

- Facsimile transmissions: Vetoed a measure by Sen. Quentin Kopp (I-San Francisco) that would have prohibited the unsolicited transmission of advertising material through a facsimile or “fax” machine. The governor noted that the Public Utilities Commission is studying the problem and will report to the Legislature by Jan. 1, 1991.

“At the very least, there should be some documented evidence of a problem before a law is enacted to prohibit unsolicited telefaxes,” he wrote in a veto message.

- Dangerous dogs: Signed a bill by Sen. Art Torres (D-Los Angeles) to give animal control officers new powers to seek court orders to regulate vicious or potentially dangerous dogs, such as pit bulls.