Employers asked to pay 7.5% of payroll wages for health care

By CMTA Staff

Capitol Update, May 18, 2007 Share this on FacebookTweet thisEmail this to a friend

In late May/early June the legislature typically analyzes the fiscal impact of all legislation before them in their Appropriations and Revenue and Taxation Committees and through budget hearings.  Two controversial bills, SB 48 (Don Perata, Senate Speaker Pro Tempore, D-Oakland) and AB 8 (Fabian Nuņez, Assembly Speaker, D-Los Angeles), have large price tags the authors hope to cover with additional taxes on businesses.  They both seek to reform the health care system by trying to decrease the number of uninsured in this state.

This week Senator Perata and Speaker Nuņez announced that their legislation will ask employers to either pay at least 7.5 percent of payroll on health care for their employees or pay that amount to a newly formed State Health Care Fund.  This percentage is significantly higher than the 4 percent in Governor Schwarzenegger’s health care proposal.  Despite the cost of the Democratic proposals, SB 48 and AB 8 will move through the process in order to set the tone of future negotiations.  At upcoming negotiations the points of contention will be who should share the cost, who should be exempted and which approach is most efficient in order to provide health care coverage to more individuals.

Although many employers might already pay more than 7.5 percent, the uncertainty of the ongoing cost of health care should be of concern to everyone.  An employer mandate sets the base upon which the State can fund expansions of programs, maintenance and the unexpected cost of implementing these ambitious proposals.  Many small businesses will not be able to afford the 7.5 percent mandate and are the most vulnerable under these proposals. 

Governor Schwarzenegger has talked about "shared responsibility" which includes an individual mandate, a 4 percent employer payroll tax, physician tax, and hospital fees.  Legislation has not yet been introduced.  CMTA believes that skyrocketing costs must be contained before the state and/or employers become responsible for more health care funding.  In addition, CMTA is fighting to ensure that businesses maintain flexibility with regards to health benefits so that they can afford to provide it to their employees.

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