California Law Mandates Employer-Sponsored Coverage

California Gov. Gray Davis signed a bill earlier this month requiring some employers in the state to purchase health insurance for workers or pay into a state fund for that coverage.

The legislation (SB 2, sponsored by state Sen. John Burton, a Democrat), requires employers to provide health care coverage for employees and dependents that is equivalent to coverage required under California’s public health insurance programs—including dental, vision, and mental health benefits—but that also includes coverage for basic prescription drugs.

If an employer chooses not to purchase health insurance for its workers, it must pay into a state fund providing such coverage.

The measure, which exempts small employers, is an indicator of increasing anxiety on the part of states about the uninsured. The Center for Health Policy Research at the University of California, Los Angeles, estimates that more than 6.3 million Californians (out of a population of about 35 million) were without insurance for all or part of 2001 and 2002.

Under the bill, large employers—those with 200 or more employees—are required to comply with the law by January 1, 2006. “Medium” employers—those with more than 50 employees but fewer than 200—would be required to comply by January 1, 2007. Employers with fewer than 20 workers would be exempt from the law, and those with 20 to 49 workers would be exempt from the law unless the state provides tax credits to help offset the cost of health benefits.

At press time, opponents planned to file paperwork to start a referendum that would block the law. A Washington, D.C., think tank released a study concluding that “SB 2 will indirectly cost residents $11.4 billion in lost jobs, lower wages and reduced benefits,” according to the October 6 Los Angeles Times.

The California Psychiatric Association (CPA) supported the bill. “We have a real interest in any measure that improves general access to medical care because of its obvious implications for those with mental illness,” Randall Hagar, director of government relations for CPA, told Psychiatric News.

“Both because of our public-entitlement programs and because of our mental illness insurance parity statute, we believe that SB 2 will mean that those who don’t qualify currently for public mental health services and are not privately insured will now have access to mental health services for the first time through either employer- or state-provided insurance.”

The California Medical Association (CMA) is a cosponsor of the bill.

“This unprecedented legislation strikes a fair balance of constructive change and compassion for the plight of the uninsured that is desperately needed in our health care system,” said Ronald Bangasser, M.D., president of the CMA and a family practitioner.

Every day “in my wound-care clinic,” he said, “I see firsthand the increasing costs [that being uninsured] passes on, affecting the prices businesses that provide health insurance must pay, leading to overcrowded and underfunded trauma-care systems and emergency rooms.”

The text of the bill is posted on the Web at http://info.sen.ca.gov/pub/bill/sen/sb_0001-0050/sb_2_bill_20030913_enrolled.html. ▪