Letters
Health Insurance
The Health Insurance Act of 2003, a law signed by former Governor Gray Davis last October, is a potentially devastating law for California employers.
Also known as SB2, the law requires California employers with 200 or more employees to help pay for their employees’ (and their families’) health insurance, or pay a tax for the state healthcare fund, by 2006. Companies with 50 to 199 employees must comply by 2007. A wide range of businesses in California opposes these additional mandates, expressing the already high cost of providing health insurance and the impact on their profits, payroll and benefits offered to workers.
According to the California Farm Bureau Federation, agriculture is California’s number one industry, contributing nearly $59 billion to the state’s economy each year, and supporting 1.1 million jobs. These workers produce more than 250 commodities and these same businesses lead the nation in agriculture exports, an average of $18.2 million daily.
Forcing new expenses on employers will pull them out of a highly competitive environment, force layoffs and may even force some businesses to close down or move out of state.
According to research done by the United Agribusiness League, under SB2 the state’s medium- and large-size firms will have to pay at least $5.7 billion. The cost to employees could approach $1.5 billion. Should single coverage be extended to small businesses (19 employees or fewer), the cost to California employers and employees could be another $4 billion. According to the California Chamber of Commerce, SB2 could end up costing California employers over $11.5 billion.
Mandating employer-based health benefits is not necessarily the most effective or efficient vehicle for helping the uninsured. Additionally, government-run programs always do not help the most disadvantaged and vulnerable workers. Instead, opponents of the new law would like the state to consider several less costly and less risky alternatives, such as simplifying and streamlining the administration of the state’s existing health insurance programs and furnishing tax credits or other subsidies as incentives for small businesses to voluntarily offer health insurance coverage to their workers.
A full range of business groups strongly opposes this new law, including the California Farm Bureau Federation, United Agribusiness League, California Chamber of Commerce and National Federation of Independent Businesses. These groups, and others, believe that there will be even more negative effects for employers as the regulations implementing SB2 are drafted, and will be active in the legal challenges to come.
William C. Goodrich
CEO/president
United Agribusiness League
Irvine
