SB2 – expanding health coverage for Californians

The California Senate and Assembly have passed SB 2 – the Health Insurance Act of 2003, intended to increase health coverage among Californians. They state that 6,000,000 Californians lack coverage at some point during a year, and 3,600,000 Californians lack coverage for the entire year.

Under this legislation, employers would be required to provide health insurance through a private insurer or by paying a fee for each employee into a State Health Purchasing Fund.

Large employers (200+ employees) would have to comply starting January 1, 2006. Medium employers (20 – 199 employees) would begin January 1, 2007. Medium employers with fewer than 50 employees are eligible for a 20% discount in the form of a tax credit. Small employers would not be affected by the legislation.

Both full-time and part-time (100 hours a month, 3 months of employment) employees would be covered. Employees can be asked to pay for up to 20% of the fee. Employees whose annual income is within 200% of the poverty line can be asked to pay for up to 5% of the fee.

“2160.3. It shall be unlawful for an employer to designate an employee as an independent contractor or temporary employee, reduce an employee’s hours of work, or terminate and rehire an employee if a purpose of which is to avoid the employer’s obligations under this part.”


I think increasing health insurance coverage is a good thing.

Providing health insurance to employees benefits employers in terms of being able to hire the most qualified workers and, if utilizing a good preventative health program, increases productivity.

I do have reservations, though. For small businesses where the level of demand that would merit expansion does not exceed the increased cost of doing business by jumping to that 20-employee level, this will discourage growth. What this means is that there will be one less job and there may be missed opportunities for that small business. A better system might be a graduated system where for employers of 20 to 100 employees could go from paying 20% of the fee to 100% of the fee in 10% per 10 employee increments. We’ll see what happens, since the fee will be based on the number of participants and the administrative costs of the program.

Furthermore, the bill doesn’t do much to rein in the escalating costs of health care, prescription drugs, and worker’s compensation, which is a huge part of the health insurance problem in this country.

Will Governor Davis sign this bill?

Probably. Now that he’s recast himself as a Progressive, he’s been trying to suck up to Californians who have been predominantly progressive for the last fifteen years. (There are two forces that will determine how this personality changes over the next ten years: the growth of the minority majority, and the continuing sprawl of the suburbs.)

I am still of the mind that some form of universal health care is what we need to ease the burdens on business and citizens. Critics bring up the specter of long lines and other problems of “socialist medicine,” but when you are talking about 40 million people nationwide who go without health care, we have a moral imperative to do something about it.