California Bill Gives Universal Coverage Efforts a Bad Name Jeff Lemieux
September 7, 2003
California's legislature may pass a sweeping employer mandate to provide health coverage within the next two weeks, and Gov. Gray Davis may sign the bill into law before the recall vote next month. By casting employers as the sole solution to health coverage crisis, the bill will mobilize the business community in opposition. As a result, the California effort -- however well intended -- is likely to be a setback for bipartisan national efforts to cover the uninsured, which depend on cooperation from both sides of the political aisle, as well as from businesses of all sizes, labor unions, health providers and insurers, and the activist community.
The bizarre political circumstances of California's gubernatorial recall have made it likely that the state's legislature will soon pass a universal health coverage bill and that embattled Governor Gray Davis will sign it into law.
According to early press reports, the bill would require medium-sized and large employers (over 200 employees) to provide coverage for workers and their families. It also mandates that smaller employers (between 20 and 200 employees) begin offering coverage for their workers (but not necessarily for families) by 2006 or 2007, or pay a new tax. All employers would have to abide by the state's expensive benefit mandates and "consumer protection" anti-HMO rules, and pay at least 80 percent of the premium. Smaller businesses may be eligible for subsidies.
The California bill appears to have some good features. For example, it would set up a state-based purchasing pool for employers who cannot or do not wish to arrange coverage on their own.
However, the bill is potentially disastrous for national, bipartisan efforts to cover the uninsured. By linking the push for "universal coverage" only with new responsibilities or taxes for employers (and virtually no responsibilities for anyone else), the California effort could poison efforts to build a bipartisan, business/labor consensus on health coverage.
Businesses have always been suspicious of universal health coverage efforts. Even when coverage proposals would actually help businesses, executives often fear that the terms would change for the worse over time. They conclude that most coverage deals are best not done in the first place.
This is tragic, because employers have a great deal to gain from properly designed actions that reduce the number of uninsured Americans.
However, the California proposal will reinforce the fears of the business community.
Moreover, this legislative battle will pit conservative proponents of expanded coverage (there are several, actually) against liberal health care activists, when those two groups should be working together.
The battle lines in the media will be drawn like this: Liberals really want universal coverage through tax-financed government-run health insurance. But if that isn't feasible politically, they want a broad employer mandate. Conservatives want individually based health coverage purchased outside the workplace, if they are interested in coverage at all.
Unfortunately, these are caricatures that do not do justice to the recent evolution of both liberal and conservative thinking on universal coverage.
Many conservative and liberal health analysts have started to coalesce around the following set of responsibilities and principles for expanding health coverage:
1. Federal subsidies for people with low incomes to help them purchase health insurance, either at work or individually.
2. State-based purchasing pools and other insurance arrangements that allow people to purchase health insurance at reasonable rates, regardless of whether they are healthy or sick, young or old, employed or not.
3. Businesses taking an active role helping workers enroll in health coverage (even if the business does not actually sponsor or subsidize coverage), arranging payroll deduction of premiums, and acting as an efficient "pass through" agent for outside subsidies for which an employee is eligible.
4. Subsidies that are neutral with regard to employer-based or individual coverage, and that don't reward lavish or "first-dollar" coverage.
5. Choices of health plans, not just the plan an employer (or government) selects.
We understand California's impatience. The federal government has not come through with a long-promised tax credit for health coverage, which legislators and analysts on both sides of the political aisle now support. Instead, the tax cuts of the last three years went to other areas. Now, the federal budget deficit is so large that that hope for large-scale federal action is limited.
However, there is hope for smaller federal actions, both this year and next. One such possibility is transitional coverage for the unemployed, which requires a degree of cooperation from employers. Another possibility is a small health tax credit or voucher for poor families, to help them purchase insurance.
Neither effort will be easy to enact because Congress is focused on drug benefits for the elderly. But there is a chance the federal government will step up and assume its responsibility.
However, California's insistence that employers should pay for universal coverage is an unfortunate throwback, with the potential to pit employers against workers and unions in a way that could delay, or even undermine the national debate.
It is hard to see how a national universal coverage effort could proceed without cooperation and support from the business community. The last thing we need right now is a punitive employer mandate that reinforces concerns that universal coverage efforts would hurt the business sector.
Links:
Sacramento Bee Making Firms Insure Workers by Lisa Rapaport (September 4, 2003)
Sacramento Bee Health Benefit Balance Sought by Lisa Rapaport (September 5, 2003)
Centrists.Org Issue Summary: Universal Health Coverage
Centrists.Org Two Promising Approaches To Expanding Health Coverage (revised July 21, 2003)
California Labor Federation on SB 2
California Chamber of Commerce on SB 2
Text of draft of SB 2 as of August 29, 2003 (from California Chamber of Commerce website)
