Los Angeles Business Journal

Mandatory Health Insurance Bills Heading Toward Passage

HEALTH CARE By Deborah Crowe Monday, June 4, 2007

Key bills in California's health care reform debate passed an important test last week, setting the stage for legislative floor fights this week that will be closely monitored both by employers and industry groups.

Most of last Thursday's appropriations committee votes in the Democratic Party-dominated General Assembly and state Senate were widely regarded as no-brainers. The lead reform bills in each house were sponsored by Assembly Speaker Fabian Nu & #324;ez (D-Los Angeles) and Senate President Pro Tem Don Perata (D-Oakland).

Few believe that legislators, other than those in the Republican minority, would buck their leadership.

Both AB8 and SB48 follow loosely along the lines of what Gov. Arnold Schwarzenegger has indicated he would support, including requiring most employers who don't offer coverage to pay a fee based on a percentage of their payroll into a state-run pool that would subsidize coverage for the poor.

But neither bill requires every Californian to take responsibility for obtaining health insurance, an important requirement for Schwarzenegger, who personally had made health insurance a priority ever since he was a struggling bodybuilder newly arrived from Austria in the late 1960s.

And while Schwarzenegger has suggested 4 percent of payroll as a sufficient and fair employer mandate, legislative leaders appear headed toward approving a 7.5 percent fee. That would enable more people to be covered and neutralize opposition from physician and hospital groups, which under the Schwarzenegger plan would have paid separate assessments based on the additional revenue they would expect to gain from the plan.

California Restaurant Association President Jot Condie has been among the most vocal of business opponents to the employer mandate, and predicts the business community will band together to file lawsuits and launch petition drives to overturn the law if the governor signs it.

"This is a societal problem and there ought to be a broader base solution than hurting the very employers who are operating on very low profit margins," said Condie, who believes a lower, but more broadly applied tax would be less burdensome and punitive.

A third comprehensive reform bill, SB 840, which is a single-payer alternative from State Sen. Sheila Kuehl (D-Santa Monica), also passed out of appropriations. It's considered to have enough support among Democrats to win legislative passage, but likely will fall victim to Schwarzenegger's veto pen, as happened last year to an previous version of the bill.

The only real drama among last week's health care votes concerned the fate of AB 1553, Assemblyman Dave Jones' (D-Sacramento) attempt to correct what he considers a key flaw in both the Nu & #324;ez and Perata plans the lack of price controls over insurers.

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