If you listened carefully last week, you almost could hear the collective sigh of business as Proposition 72 went down to defeat, albeit narrowly.
The proposition mandating that companies provide healthcare insurance for workers arguably was the biggest thing for business on last week’s ballot.
The battle over the initiative brought echoes of the recall fight a year ago, pitting a law signed in the final hours of the Gray Davis administration against opposition from business-minded Gov. Arnold Schwarzenegger.
The defeat of Proposition 72 nixes SB 2, legislation passed last year requiring employers to provide healthcare for workers and pick up at least 80% of the costs.
The law was set to take effect in stages starting in 2006.
Proposition 72 “was a very bad proposition and a very bad bill,” said Julie Vandermost, owner of San Juan Capistrano-based environmental consultant Vandermost Consulting Services Inc., who was active in the movement to defeat the measure.
Vandermost and other local businesses warned of layoffs, other cuts and stifled expansion if voters passed Proposition 72.
And it was close. Unlike another key business initiative, Proposition 64, the healthcare measure was defeated by a narrow margin of 161,466 votes, a slim 51% majority for businesses.
Now that the measure is dead, some observers think employer-mandated healthcare may be a nonstarter.
“I don’t see it really going anywhere,” said Thomas Buchmueller, an associate professor at the University of California, Irvine, Graduate School of Management who specializes in healthcare economics. “It was signed into law under unique circumstances with the recall. Davis was attempting to shore up the Democratic base.”
Republican Schwarzenegger’s opposition to the measure probably ensures it will be “a while before any politician would handle it,” Buchmueller said.
For some, Proposition 72 wouldn’t have had much impact, Buchmueller said. The first businesses set to be affected in 2006 were big employers, the majority of which already offer health insurance.
But for those that don’t, or for those offering less than what the initiative mandated, the result could have been a deciding factor in keeping operations here or cutting back on hiring. The measure would have had even more bite later, when it eventually could have covered businesses with as few as 20 workers.
Backers of the measure said they still see the issue as having wings.
“More than 4.5 million Californians voted for healthcare reform,” said Anthony Wright, executive director of Health Access, a Sacramento-based consumer group that backed the measure. “Despite $16 million worth of scare tactics, half of Californians want and support healthcare reform. So we have some momentum.”
It is too early to tell whether proponents will attempt to come back with another initiative or try to push through legislation, Wright said.
Wright said he still believes business has a role to play in healthcare.
“It is not credible to say no to either controlling costs or expanding coverage,” he said.
Vandermost said she wanted to see more discussion about healthcare, which she called “a very emotional issue for people.”
But any attempt at healthcare reform needs to be through a market-oriented system where insurance companies compete in order to get business, she said.
A revival of Proposition 72 by the Democratic-controlled Legislature would be “a futile, Don Quixote-type struggle,” according to Michael Shaw, assistant state director of the National Federation of Independent Business, one of the groups against the measure.
Shaw also downplayed the possibility that proponents could mount another ballot initiative, considering that some 700,000 signatures are required to put a proposition on the state ballot.
The Sacramento-based California Chamber of Commerce and the California Restaurant Association, also based in Sacramento, gathered signatures to place Proposition 72 on the ballot in the hopes of defeating SB 2.
Some of the measure’s biggest backers were doctors’ groups, nurses and unions. The Yes on 72 campaign featured commercials done by Maureen Berry, a local nurse who is an activist with the California Nurses Association.
Yes on 72 supporters also included the California Medical Association and unions, though unionized businesses would have been exempt from the law. Still, several unions, including the United Food and Commercial Workers Union, poured millions of dollars into the Yes on 72 efforts.
Starting in 2006, the measure would have covered businesses with 200 or more workers, requiring them to pick up 80% of health insurance costs for workers and their dependents, or pay fees into a state fund run by the Managed Risk Medi-Cal Insurance Board.
Come 2007, the mandate would have broadened to cover employers with 50 or more workers. Those businesses with 20 to 49 workers would have been added only if the Legislature would have enacted a tax credit to offset 20% of the cost.
