California voters reject health care reform proposals

Business & Health, Jan, 1993 by Eric Zicklin

California voters have rejected Proposition 166, a health reform proposed by the California Medical Association. Proposition 166 would have required employers to pay at least 75% of basic health costs for employees who work at least 17.5 hours per week. The proposal would have forced many smaller employers out of business and could have cost the state 129,000 jobs, says Joy Howell, a spokesperson for the Consumer Health Insurance Coalition, a group of 400 associations that lobbied state voters to reject Proposition 166.

Clark Kerr, president of the California Business Group on Health, a coalition of 400 employers, says his group opposed Proposition 166 "because it was a straight employer mandate without cost containment features."

A study done for the Bay Area Business Group on Health, a group of 17 large employers that represents 2.5 million covered lives in San Francisco, showed that Proposition 166 would have cost small businesses $6.2 billion a year in employer premium contributions, and $8.6 million if employee contributions were included.

"In addition to lacking cost containment, the proposal was not an improvement over our existing health care system," says Patricia Powers, executive director of the business group.

The defeat of Proposition 166 comes within weeks of Gov. Pete Wilson's veto of the California Health Reform Act of 1992. (See "Garamendi health reform plan relies on public-private partnership," page 86, Mid-March 1992.) The universal access bill was sponsored by Insurance Commissioner John Garamendi.

Powers says Garamendi's proposal failed, in part because it sought to establish a health care commission when the state's existing commission "does not have adequate funding."

The Garamendi proposal sought to establish a health care system financed by a 7.75% payroll tax. The bill was aimed at consolidating employee health benefits with workers' compensation.

Workers' compensation rates are highest in Texas, lowest in Virginia,

A national study of workers' compensation costs shows manufacturers in the Northeast pay over $3,000 more per employee than manufacturers in neighboring Atlantic states.

The cost of workers' compensation insurance varies by as much as 361% across the country, according to the study compiled by Actuarial & Technical Solutions Inc., actuarial consultants in New York.

The study lists employers' net workers' compensation costs in 44 of 50 states. Six states--Nevada, North Dakota, Ohio, Washington, West Virginia, and Wyoming--were excluded from the study. The workers' compensation system in those states is administered by the state and therefore no insurers offer coverage.

Fear of losing health benefits deters workers from switching jobs

One in five American workers say they, or a family member, are locked in their jobs because changing jobs would limit their health insurance, according to a survey conducted by Louis Harris & Associates for the Henry J. Kaiser Family Foundation, a philanthropy in Menlo Park, Calif.

Of 1,250 respondents, 35% say the cost of insurance at the new job would be too high, while 30% say the new job offered no health insurance at all. Eleven percent say the new job offered no coverage for dependents; 4% say the new insurance would not have covered a preexisting condition for which they or a family member needed medical care.

The working poor and middle-class families were most likely to feel locked in a job for health insurance reasons. Upper income people and those with advanced college degrees were least likely to be hindered professionally, the survey data show.

Twelve percent of respondents with postgraduate college degrees and 15% of those earning $50,000 or more annually say they have stayed in their jobs because they are concerned about health insurance. In contrast, 22% of respondents holding only a high school diploma and 23% of those earning between $25,000 and $35,000 annually say they have experienced such "job lock."