California voters will have a chance on election day to stop a multibillion-dollar health care scheme that will cut short the state’s economic recovery.
Voting “no” on Proposition 72 stops enactment of SB 2 (Burton; D-San Francisco; Chapter 673), the multibillion-dollar health care tax passed by the California Legislature late in the 2003 session without meaningful public input and then signed by Governor Gray Davis just days before his recall.
Coverage Mandate
Proposition 72 requires California employers with 20 or more employees to pay a tax to a government agency to provide health care for their workers or to pay at least 80 percent of their workers’ health premiums. Employers with 200 or more employees also must pay a tax to a government agency for dependent coverage.
Workers will have to pay their 20 percent share for coverage under Proposition 72 whether they want, need or can afford it. If this is not bad enough, a board of non-elected state bureaucrats with extraordinary power to make critical health care decisions under Proposition 72 would run this government health care scheme. These bureaucrats will decide how much employers and workers will pay, what medical services are covered and what providers will be allowed to treat patients in the plan.
The mandate to provide coverage also extends to employees working fewer than 35 hours a week but more than 100 hours a month.
If voters don’t reject Proposition 72 in November, its mandate will apply to businesses with 200 workers or more starting in 2006, employers with 50 to 199 workers in 2007 and businesses with 20 to 49 workers when a partial tax credit is enacted. The tax credit proposed in Proposition 72, however, would cover only a small amount of the real costs and burdens this scheme would place on small employers.
In fact, if Proposition 72 passes, employers with 20 to 49 workers may not be able to buy a health insurance policy unless the employer pays at least 80 percent of the premium.
New Tax Threatens Jobs
This measure will make California the only state in the country to impose a health care tax on both employers and employees. That new multibillion-dollar health care tax threatens jobs and California’s economic recovery, but does nothing to address the skyrocketing costs that are the real problem with health care in California. In fact, Proposition 72 will only make the problem worse.
An economic study of Proposition 72 by the Los Angeles Economic Development Corporation found that this government-run program will cost employers and workers at least $7 billion in the first year of implementation alone.
A study released more recently by the Employment Policies Institute, a non-profit research organization dedicated to studying public policy issues surrounding employment growth, concluded that Proposition 72 will cost businesses up to $12.9 billion a year and cause California to lose as many as 150,000 jobs.
New Costs for Employers
Even employers who already provide health coverage to their employees face significant new costs if Proposition 72 goes into effect. For example, Proposition 72’s requirement that employers provide coverage for all employees who work 100 or more hours per month is lower than the 120 hours per month threshold many employers use.
Moreover, Proposition 72 requires employers to pay for health care benefits after the employee has been on the job just three months, with no exceptions for seasonal or temporary employees. Many employers require a six-month wait.
Proposition 72 also caps the contribution low-wage workers must make toward their health care at 5 percent of wages. Employers may have to pick up the remainder. Employers are responsible for transmitting the 20 percent payment from employees, even if they do not pay it. The measure authorizes fines of 200 percent of the cost of health care.
Coalition Opposition
A broad-based and growing coalition led by the Chamber has come together to help ensure that Proposition 72 is rejected in November. Doctors, educators, employers, charities from across the state and Governor Arnold Schwarzenegger, all have joined the effort to stop this costly measure from becoming law.
Every major daily newspaper in California has published editorials opposing Proposition 72, including the Los Angeles Times, San Francisco Chronicle, Orange County Register, San Jose Mercury News, San Diego Union Tribune and The Sacramento Bee.
We all agree that there is a health care crisis in California, but Proposition 72 is not the answer. Instead of increasing the number of the insured, Proposition 72 will cost jobs and increase the number of unemployed in our state. The health care tax it will impose is another step toward government-run health care.
To keep jobs and employers in our state, Californians must say “no” to Proposition 72 on November 2.
Allan Zaremberg is president and chief executive officer of the California Chamber of Commerce and co-chair of Californians Against Government Run Healthcare, the coalition campaign opposing Proposition 72. For more information on the No on Proposition 72 campaign, please visit www.noprop72.org.