Deukmejian Rejects Staff’s Health Plan : Policy: He disavows proposal by his health and business secretaries requiring employers to provide workers medical insurance.

In an odd political twist, the Administration of Gov. George Deukmejian on Thursday proposed requiring all California employers to provide health insurance for their workers, only to have the governor immediately disown the plan.

Deukmejian, in a statement released by his office, suggested that the ambitious proposal, crafted by his chief advisers on health and business issues, was no more than one additional ingredient in the stewpot of ideas on health insurance simmering in the Legislature.

“A consensus among interested parties has yet to emerge, and so I wish to make it clear that the options outlined in the report do not constitute a proposal by me or my Administration,” Deukmejian said.

The Republican chief executive said he remains committed to extending health care coverage to the more than 4 million working Californians and their families not now covered by any plan.

But he said he would agree to do so only if “it can be accomplished without placing an unreasonable burden upon small businesses.”

Deukmejian’s conflict with his own staff is expected to muddle further an already complicated political calculus. The conflict serves to highlight how difficult the Administration’s task will be when the Legislature tackles the health insurance problem this year.

Without new taxes, which Deukmejian has pledged to avoid, most experts agree that the only way to cover a significant number of the more than 5 million uninsured Californians is to require all employers to provide insurance for their workers. Doctors, hospitals, some consumer groups and large segments of the insurance industry support such an approach.

But most businesses philosophically oppose the idea of a mandate. Their political representatives are likely to accept the requirement only if it is coupled with huge subsidies to offset the increased cost. That, however, would probably require a tax increase.

The $2.2-billion proposal put forward Thursday by Health and Welfare Secretary Clifford L. Allenby and Business, Transportation and Housing Secretary John K. Geoghegan would require all employers to cover 75% of the cost of insurance for their employees. They could deduct the balance of the premium costs from the paychecks of their workers, who would be required to accept the insurance.

The plan includes provisions to subsidize low-wage workers and low-profit businesses, mainly by allowing them to join the Medi-Cal program, which is now limited to the poor. It also would change the way the insurance industry operates so that no one could be denied coverage based on their health history, and small businesses would not pay significantly more than large companies.

Although the 29-page report included three paragraphs on the idea of improving the current voluntary health insurance system, it concluded that the problem could not be solved without requiring employers and employees to participate.

The report provided a rare glimpse at dissension within the Deukmejian Administration, which for seven years has spoken with one voice on major issues. Unlike the previous Administration of former Gov. Edmund G. Brown Jr., Deukmejian’s appointees and staff almost never offer a public position different from the governor’s.

The proposal now will be crafted into legislation and introduced by Assembly Speaker Willie Brown (D-San Francisco). Brown’s top aide on the issue said Thursday that he believes Deukmejian will in the end support the idea of requiring employers to provide insurance.

“I think he still feels strongly about the principle of covering workers and their dependents,” said Steve Thompson, director of the Assembly Office of Research. “How that cat is skinned is open to continued conversation.”

But Maryann O’Sullivan, director of Health Access, a consumer and labor coalition, said she was disappointed that Deukmejian backed away from the plan. O’Sullivan’s group has criticized the proposal as unrealistic without new taxes but had hoped that Deukmejian’s direct involvement would lead to a solution.

“Leadership is what’s missing here,” O’Sullivan said. “The interests involved are not going to change their positions, not going to move forward, unless there is a hammer out there. The only hammer is for the Legislature and the Administration to demonstrate some kind of out-front leadership.”

The president of the California Chamber of Commerce, however, applauded Deukmejian’s position.