State closer to requiring full employee coverage

Ryan Carter

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

“job killer.”

“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.