Legislation that would require small business owners to provide their
employees with health- insurance coverage has passed through a
conference committee headed by Assemblyman Dario Frommer (D-Burbank)
and was expected to wind up on the governor’s desk Friday night.
A six-member committee of legislators agreed earlier this week on
the bill, which the Senate passed and the Assembly was expected to
pass late Friday, the final day of the 2003 legislative session.
The landmark bill, which is opposed by the California Chamber of
Commerce, would require employers to either pay into a state
health-care fund that would cover their employees or pay for health
insurance packages directly, according to a summary of the draft that
cleared the committee.
Under Senate Bill 2, originally introduced and pushed through both
houses by state Sen. John Burton (D-San Francisco), firms with 200 or
more employees would be required to purchase medical benefits for
workers and their dependents by Jan. 1, 2006, or pay into the
health-care fund. Business with 50 to 199 employees would be required
to provide coverage for employees only by Jan. 1, 2007.
The bill comes at a time when business leaders are lamenting high
health-care and workers’ compensation costs. Some area officials
criticized the legislation, claiming it will adversely affect
health-insurance payments for employees in the Burbank business
“I really do not think it is wise to put that kind of a burden on
businesses, which are already having a tough time making it in this
state as it is,” said Susan Bowers, executive director of the Burbank
Chamber of Commerce.
Assemblyman Dennis Mountjoy (R-La Crescenta) called the bill a
“It is the last nail in the coffin of California’s economy,” he
Frommer, though, contends that between the committee’s
health-insurance mandates and additional legislation to reform the
state’s workers’ compensation program, businesses could actually save
“I’m really pleased,” said Frommer, who chairs the Assembly’s
health committee and has made insurance coverage for small business
workers one of his top priorities. “At the same time we got a
workers’ compensation bill done, which will generate $5.3 billion in
According to Frommer, the way the bills go together would allow
the health- insurance legislation to be phased in with the workers’
compensation savings to be felt first. Ultimately, the required
health-insurance payments would save the state money because the
small number of employers that have not insured their workers will
begin picking up the slack.
“Pooling more employers will bring the cost of health care down,”
Frommer said. “These two packages together hold the promise of saving
these employers money.”
Most mid-size to large employers in the state offer health
insurance to employees, according to Frommer. When he introduced a
similar bill earlier this year, he cited a UCLA Center for Health
Policy Research study that found that 87.4% of workers at businesses
with 51 to 99 employees are offered health insurance, while 91.7% of
employees in businesses of 100 to 999. And 97.8% of employees working
for companies with more than 1,000 employees are offered health
Still, hospitals are forced to treat many uninsured employees,
which forces them to turn around and negotiate for higher treatment
costs with health-insurance com- panies that raise premiums,
officials said. The result is a cost of $5.6 billion to the state to
treat the uninsured.
Some salvation in the draft that cleared the committee exists for
smaller businesses. The requirements will not apply to business with
20 to 49 employees unless a subsidy equal to 20% of the employer’s
net cost is enacted.