(January 17, 2008) California Assembly Speaker Fabian Núñez’s health care bill, ABX1 1 will be considered January 23 by the Senate Health Committee.
California Chamber of Commerce-opposed ABX1 1 creates a new expensive entitlement program and expanded Medi-Cal program by imposing a tax on employers and also depends on a declining revenue stream of increased tobacco taxes.
The CalChamber has joined in opposition with the California Taxpayers' Association, California Business Properties Association, California Business Roundtable, California Hotel and Lodging Association, California Retailers Association, California Restaurant Association, California Manufacturing and Technology Association, Consulting Engineers and Land Surveyors of California, IBA West and the National Federation of Independent Business.
The CalChamber believes that the bill poses considerable risks to consumers, workers, employers and taxpayers, without any demonstrable evidence that its promise of increased health care access can be delivered over the long term.
The primary funding sources of the bill, which are used to leverage other matching federal and private individual revenues, include a tobacco tax, a hospital revenue tax and an employer tax. The tobacco tax will begin an immediate declining revenue trajectory the very year it is imposed. The hospital revenue tax is directed primarily to support increased Medi-Cal hospital rates, not improved access for the uninsured. The employer payroll tax will settle disproportionately on small and low-wage businesses.
The bill’s provisions anticipate revenue that will likely be inadequate for the programs proposed. If the California 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. This could result in an untenable situation where coverage would be terminated in the middle of an individual’s medical treatment.
The only conceivable alternatives to terminating treatment would be for the government to reduce reimbursement rates to program providers or arbitrarily reduce premiums. Both scenarios would shift costs to employers and employees in the private and public sectors, union and non-union alike. Beyond these choices, the only other solution would be additional tax increases.
In addition, many Californians, including the self-employed, rely on affordable individual policies for their health care coverage. ABX1 1 would impose substantial premium increases on these individuals by inappropriately providing for guaranteed issue and community rating, while avoiding enforcement of the individual mandate. New York and New Jersey have similar individual market provisions, and suffer the highest individual health insurance premiums in the country.
Moreover, the health care package undermines the intent and spirit of the Employee Retirement Income Security Act (ERISA), which is to allow multi-state employers to provide and administer uniform health care benefits to their employees. Recent federal court rulings in Maryland and New York have emphatically held that state employer mandates violate ERISA.
Action Needed
ABX1 1 is scheduled to be heard on January 23 before the Senate Health Committee. The CalChamber is encouraging businesses to contact their senators and committee members to urge them to oppose ABX1 1.
A sample letter is available at www.calchambervotes.com.
Staff Contact: Marti Fisher
Additional Materials
Health Care