CA Governor Inks Health Care Bill

October 6, 2003 ( - California Governor Gray Davis signed into law legislation requiring a large portion of the state's employers to provide health care coverage to their workers.

The newly signed bill requires all companies with 200 or more workers to offer insurance for employees and their families starting in 2005 or pay fees to support a statewide insurance program. Firms with between 20 and 199 employees will have to give workers, but not their families, insurance by 2006 or pay similar fees to the state. In most cases, companies will pay at least 80% of the monthly insurance premium, leaving workers to pay no more than 20% of the tab, according to news sources.

Employees would qualify for coverage under the law if they worked at least 100 hours per month and had been with their current job at least three months. Workers who qualify would either get insurance on the job or through a state-run insurance pool. Four out of five of California’s approximately 6 million uninsured residents are workers and their families.

Despite the perception that such a move would put significant cost pressure on California’s small businesses, a majority of the state’s employers are behind the move. More than six out of 10 (64%) of the state’s businesses recently polled by The Institute for Labor & Employment (ILE) at the University of California support the provision of the bill. Further, 59% of business that do not currently offer health insurance to workers also voiced their support for the measure.

This may be due to the fact that an overwhelming number (90%) of firms that currently do not offer health benefits are in markets where their competitors do not provide such benefits either. This suggests that businesses most impacted by the proposed reform would be unlikely to face idiosyncratic increases in costs that would worsen their competitive position.