The
The
legislation has been billed by its supporters as a reasonable extension
of our current, employer-based health insurance system. Ninety percent
of privately-insured
Therefore, requiring employers to offer health insurance solves the problem. If
employers would rather not offer health insurance, they can simply
remit a "fee" to the state, which will provide the employees coverage.
Putting
such elegant theory into practice, however, requires a bit of coercion.
Employers, after all, are free to provide employees with health
insurance today, should they and their employees deem it a useful form
of compensation. In fact, they are encouraged to strike just such a
bargain by the tax code, not to mention insurance agents and brokers
who earn their living by convincing employers to purchase their
services.
So let's take a look at how
Once it's up and running, the State Health Purchasing Fund will be financed by "fees" and "contributions" from
The
actual "fees" aren't specified in the bill. Instead, the legislators
felt comfortable giving the program's administrators the power to set
the fees or tax rates. "The board shall establish the level of the fee
by determining the total amount necessary to pay for health care for
all enrollees," states the legislation. In other words, the program has
a blank check.
Then
there are definitional problems -- as in what defines insurance for the
purposes of qualifying for not having to pay the new tax. Those running
the program will determine a government-mandated health insurance
policy for the state, including "deductibles, coinsurance, or
co-payment levels for specific benefits, including total annual
out-of-pocket costs."
It
is to avoid such micromanagement that many large companies self-insure
under a 1974 federal law known as ERISA. This bill seeks to erode that
exemption and force large, multi-state companies such as WalMart to
conform to the
But
it's not the large employers who will suffer most under the yoke of
this bill, but rather the state's small and medium size employers --
those who have the gall to employ fewer than 200 Californians. These
businesses are less likely to already offer health insurance and will,
therefore, face the choice-buy our plan or pay our taxes.
The
legislature, which pays little mind to increasing government
regulations, has anticipated some of the obvious ways for business to
mitigate the impact, such as switching employees to independent
contractors. That will henceforth be illegal. (Enforcing this
prohibition will also require additional money from the taxpayers.)
Unfortunately for Californians who prefer employment to unemployment,
the legislature can't prevent the most effective way for businesses to
avoid these new regulations and mandates -- leave the state.
Governor
Gray Davis must now decide whether this bit of last-minute legislative
handiwork will become law. It would be ironic if one of the last acts
of this governor, currently stuck in a budget deficit quagmire and an
economy shedding jobs, were the signing of this bill.