Business Groups Announce Opposition to California Health Care Bill
East Bay Business Times - by Marie-Anne Hogarth
Thursday, January 10, 2008

Business groups are lining up against the proposed health care reform plan touted by Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Nunez.

The California Chamber of Commerce, the National Federation of Independent Business, and the California Manufacturers & Technology Association were among the list of a dozen business-friendly groups that signed a letter Jan. 9 announcing their opposition of Assembly Bill X1 1, the health care reform bill that could provide insurance to 70 percent of Californians without coverage.

Meanwhile, the Coalition to Advance Healthcare Reform, the alliance of big businesses organized by Safeway Inc. CEO Steve Burd to promote market-based health care reforms in California, had not yet thrown its support behind the bill this week, saying it was still talking to members. The group has stood behind Schwarzenegger before and Burd nonetheless is supporting the legislation, although he doesn't agree with all parts of it.

"Health care reform isn't going to end with the passage of this initiative this fall, and we will continue to work on health care issues as a state," said Kevin Herglotz, a spokesman for the grocery giant. "(Steve Burd) is very complimentary of the work that has been done and wants to continue to work to strengthen parts of the legislation overall."

The bill passed the state Assembly - despite news of a budget deficit that has ballooned to $14 billion - and it is headed to the state Senate Health Committee on Jan. 16. The governor and Nunez have also distributed language for a ballot measure outlining the funding mechanism for the bill, including a cigarette tax, hospital tax revenue and an employer fee, among other things.

The bill mandates a sliding fee scale for employers - a minimum of 1 percent for payrolls up to $250,000 and 6.5 percent for those larger than $15 million. Employers would also be required to let employees pay their health insurance premiums on a pre-tax basis.

It would require that most Californians purchase health care insurance, unless they fall under low-income standards.

The letter by the business groups said that the health care reform package poses "risks" to consumers, workers, employers and taxpayers, without demonstrating evidence of its promise of health care access for the long term.

"If the director of finance determines revenues are inadequate, some of the programs, most notably the subsidized pool coverage for low-wage workers (though not the tax increases or many of the regulatory mandates) would be suspended," the letter said. "This could result in an untenable situation where coverage would be terminated in the middle of an individual's medical treatment."

The groups include the California Taxpayers' Association, California Business Properties Association, California Roundtable, California Hotel & Lodging Association, California Retailers Association, California Restaurant Association, Consulting Manufacturing and Technology Association, Consulting Engineers and Land Surveyors of California and IBA West.

They also argue that the plan would penalize self-employed Californians who could see increases in their individual policies.

Manuel Cosme, president of Vacaville-based PayRoll Partners Inc. and a member of the National Federation of Independent Business, said he worried about the impact of the employer mandate on his 14-employee business. He said he is already paying a host of taxes, including workers' comp, unemployment insurance and worker training taxes, federal unemployment, Social Security and Medicare.

"I like the governor but the small businesses cannot handle any more than they do now," Cosme said.

On the other end of the spectrum, a spokesman for Burd said the CEO believes the current system is broken and that the problem of millions of uninsured Californians is a cost to the business community.

"We need to solve the health care crisis and we can't wait," said Safeway's Herglotz. "Like Steve said, a lot of people want to throw stones, but where is the solution? We are all paying for a broken system and are paying for the burden of the uninsured when somebody goes to the ER."

According to Herglotz, Burd is interested in seeing more language in the bill concerning transparency when it comes to health care costs and a more-robust section related to prevention and corporate wellness programs.

Kaiser Permanente - one of the 30-some big employers in Burd's coalition - reiterated its support for the legislation even in uncertain economic times.

"This is a historic opportunity to expand access to affordable, quality care and coverage to all Californians," the Oakland HMO said in a statement. "We applaud the governor and legislative leaders for their extraordinary efforts to reach agreement."

mhogarth@bizjournals.com | 925-598-1432