Governor Expected to Sign Health Bill

Although Gov. Gray Davis refused to tip his hand Tuesday, there are growing indications that he will sign a far-reaching bill that would provide health care insurance to 1 million workers who cannot now afford policies.

Although employers oppose it as an undue burden at a time when the economy is struggling, the bill is strongly supported by labor leaders who are backing Davis in the stretch drive of his campaign to defeat the recall proposal in Tuesday’s election.

The bill would require the state’s biggest employers to provide coverage for uninsured workers or pay fees into a statewide pool that would purchase policies and pay the premiums. The bill would take effect in 2006. Statewide, there are an estimated 5 million Californians who do not have health insurance.

At an appearance in Los Angeles, Davis would only promise to announce a decision before Tuesday’s recall vote.

“I think he is going to sign it,” said Steve Thompson, vice president of government relations for the California Medical Assn., a co-sponsor of the bill. He said Davis told him in a recent conversation that he believed the bill was a “good idea,” but that he wanted to “make sure it is not harmful to small business.”

Daniel Zingale, the governor’s point man on health policy, said he briefed Davis on parts of the bill Monday and believed the governor had yet to decide.

Zingale noted, however, that the bill (SB2), by Senate leader John L. Burton (D-San Francisco), was written to reflect changes Davis had demanded before the Legislature passed it and recessed 10 days ago.

These included protections for small and medium-size businesses, which employ most Californians affected by the bill. They were exempted from the requirement to provide insurance unless they got a tax credit subsidy from the state.

Sources on both sides of the issue said they believed Davis would sign it, especially in the aftermath of a new Census Bureau report, which found that the ranks of Americans without health care coverage had climbed to 43.6 million, the biggest increase in 10 years, and that employer-financed coverage had fallen.

Zingale said the report’s findings held “important implications” for the future of California’s health care bill. He did not elaborate but added, “I think they are very relevant to the SB2 question at hand.”

Jack Stewart, president of the California Manufacturers and Technology Assn. and a foe of the bill, also said “all indications” pointed to Davis signing the bill. “This is labor’s top issue, not only in California but nationally.”

“This bill pits labor’s No. 1 issue against what is the business community’s No. 1 [long term] issue right now,” Stewart said. “Labor wants to start in California and take it to Washington.”

Stewart said the California bill represented a “multibillion-dollar mandate” on employers at a time when employer-financed workers’ compensation insurance premiums are out of control and California employers next year will face premium increases of $2.3 billion for the troubled unemployment insurance fund. On Tuesday, Davis signed bills that seek to overhaul the workers’ compensation system.

“Workers’ comp costs will pale in comparison” to the costs imposed by the health care measure, Stewart said.

He complained that the Burton program contained no meaningful restrictions on escalating health care costs but demanded a certain level of coverage, regardless of a business’ ability to pay for it.

“We think it takes too much flexibility away,” Stewart said.

Zingale, Davis’ health policy advisor, agreed that more aggressive cost controls were needed but insisted that such controls were at least indirectly included in the health insurance legislation. He said delaying the start until 2006 was one way to control costs while officials explored ways during the next two years to inject direct controls.

A companion bill (AB 1528) also would create a 27-member commission to investigate health policy issues, including cost containment, and make recommendations to the governor and Legislature.

“This opens the door to meaningful cost containment,” Zingale said.

The nonprofit Foundation for Taxpayer and Consumer Rights, which supports the bill but has been highly critical of its failure to include direct cost controls, urged Davis on Tuesday to sign the measure, but also asked him to “commit” to finding ways to limit the prices paid to doctors and hospitals.

Times staff writer Gregg Jones contributed to this report.