Mandated Employer Health Coverage Urged

State Senate leader John Burton proposed a sweeping measure Thursday requiring that all California employers offer their workers health insurance or contribute to a fund that would cover the state’s approximately 5 million working poor.

Burton said the plan would dramatically expand insurance coverage, ensure that Californians stay healthier and make a significant dent in the state budget deficit.

He estimated that employer-paid health insurance would produce $1.5 billion to $2 billion a year in savings to the Medi-Cal health-care program for the poor and to the Healthy Families program for their children.

“We are not looking to drive people out of business, but we are looking to drive people into a health-care system,” said the senator, whose plan drew the support of two influential lobbies, organized labor and physicians.

The plan, which Burton said he will introduce as a bill soon, drew immediate opposition from the California Chamber of Commerce, which represents 16,000 employers, two-thirds of which consider themselves small businesses.

Richard Costigan, the chamber’s chief of governmental relations, said most of the organization’s major members provide health benefits to their workers. But he warned that imposing a new state-mandated cost would be economically hazardous.

“There is not an unlimited pot of money,” Costigan said. He said large and small businesses would have to either pay the new insurance costs or “lay people off, delay hiring, not expand the business or look at relocating out of state.”

Citing troubled Los Angeles as an example, Burton and his backers warned that California is in a health-care crisis in which costs are increasing, accessibility to assistance is decreasing and fewer people can successfully handle the financial burdens of sickness.

“The health safety net can no longer sustain the current demands being imposed upon” it, said Steve Thompson of the California Medical Assn.

Burton, a liberal Democrat from San Francisco, said it was unknown how much his proposed legislation would cost, but asserted that it could create as much as $2 billion a year in savings to state programs that no longer would have to pay the high costs of emergency room care for uninsured workers and their families.

Similar bills have been proposed in the past, but have never survived, mostly because major employers have mounted persuasive lobbying campaigns against them. In the 1950s, Republican Gov. Earl Warren sponsored one of the earliest bills to expand health-care insurance. Burton recalled that it was killed by the medical association, which then opposed such legislation.

Several other bills on the issue are expected to be introduced, but Burton’s would appear to have the best odds for passage, because he is the most powerful legislator in California and because labor unions and doctors are politically influential and are generous campaign contributors.

A spokesman for the California Manufacturers and Technology Assn., also a major employer organization, said officials were unfamiliar with Burton’s plan and declined to comment until they had seen it. In the past, the association has opposed similar bills.

Burton, who said he did not want to “go to war” with employer groups and was willing to discuss issues with “enlightened employers,” predicted that many businesses would ultimately support his program.

Under Burton’s proposal, employers would either pay the health-care premiums directly for about 5 million working poor and their dependents or make payments to a pooled fund from which insurance would be purchased.

Art Pulanski, secretary-treasurer of the California Labor Federation, AFL-CIO, told a news conference that taxpayers and employers who do provide health benefits are subsidizing through their taxes the “free rider” employers who do not.

“It’s time for this to end,” he said.

Burton said he expects that many employers will join labor and the doctors in support of the bill, especially those who have paid higher premiums because other employers and competitors who did not offer health benefits were happy to accept the subsidy.

He said specifics on financing the program would be worked out with employers, suggesting that a possible mix might have employers paying 80% of the costs and employees contributing 20%. But this notion played badly with Pulanski, who said unionized employees receive the best of medical benefits and want all Californians to have health insurance too. He said employers pay 100% of insurance costs in most union contracts.

Hilary McLean, a spokeswoman for Gov. Gray Davis, said health care for the poor has increased under Davis, but added that the governor has not taken a position on any health-care programs so far. “He’ll be watching them closely,” she said.