Join the Campaign to Defeat SB 2 on Nov. Ballot

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, April 23, 2004 Share this on FacebookTweet thisEmail this to a friend

California voters need to be informed about the potentially disastrous consequences of SB 2 (John Burton, D-San Francisco), the mandatory healthcare law that was signed by Governor Gray Davis days before he was recalled from office. SB 2 would mean $7 billion per year in new taxes to fund a government-run healthcare program that would replace private insurance for many families and determine what kind of healthcare coverage they will receive.

For many businesses, the vote on the referendum to repeal SB 2 could mean the difference between survival and failure. For cities, counties, schools and non-profits, it means another unfunded mandate from Sacramento that will cause cutbacks in programs and services that people want and need.

Many employers think SB 2 doesn't affect them because they already provide healthcare coverage. They are not aware of other features of the bill described below. Sloppily drafted and rushed through the legislative process with little debate or public scrutiny, SB 2 contains vague, contradictory provisions that go way beyond providing health insurance to the uninsured. Unless it is stopped at the ballot box, SB 2 is certain to cause economic chaos and bureaucratic headaches for years.

Employers should know the following facts about SB 2:

Pay now. Refund later?
If you already provide healthcare coverage, you could be required to pay the new tax and then apply for a refund after proving that the existing coverage meets state requirements.

You could pay for workers who don't work for you.
SB 2 appears to base coverage requirements on how many people you employ on a specific date. If a worker leaves after that date, you could still be required to pay for that worker's coverage! The same might be true for seasonal workers. If you hire someone for more than three months, you might have to pay that workers' healthcare insurance for the balance of the year. The bureaucrats will decide.

Health benefit levels and taxes will be determined by bureaucrats.
SB 2 gives an un-elected state board the authority to determine what is covered by the state plan against which private coverage is measured. Even if you already provide coverage to workers, your benefit plan may not be acceptable, and you could be forced to find other coverage or pay the tax to cover your workers through the state plan.

Part-time workers – and their dependents – get healthcare benefits.
SB 2 requires businesses to pay 80 percent of the cost of healthcare benefits for employees who work just 100 hours per month. Many businesses either don't cover part-time workers, or pay less than 80 percent of their coverage. And businesses with more than 200 employees must pay 80 percent of the cost for dependent coverage as well.

Workers can't refuse coverage.
Your employees don't have the option of deciding for themselves if they want the coverage mandated by SB 2. A healthy 25 year-old with limited income must pay 20 percent of the cost of the state-mandated health coverage even if he needs that money to pay rent or buy food. If for any reason an employee does not pay his 20 percent share of the cost of coverage, the employer must pay. You could be subject to a penalty of 200 percent of the payment for workers who do not pay their premiums.

Penalties and lawsuits.
Employers face lawsuits and substantial penalties if they are accused of reducing hours or taking other measures to avoid covering employees. The authors of the bill included specific provisions to treat businesses with common ownership and control as a single entity. Employers face a 200 percent penalty if the premium is not paid, and there is no provision for appealing any action taken against employers in disputes over payment.

Join the Campaign Against SB 2:

Go to to sign up and make a contribution. Polls show that when voters are told that SB 2 will impose a government health care system that could affect their own health care, they overwhelmingly reject it. The only hurdle to a successful defeat of SB 2 is raising the money to fund the media campaign to get this information to voters. Employers are urged to contribute at least 5% of their costs of complying with SB 2 for the first year (easy calculation forms are available on the website).

And don't forget to tell your employees about the impact of SB 2 on their health plans so they can make an informed decision at the ballot.

Senate Bill 2 is full of unpleasant surprises. It's up to all of us to prevent those surprises from becoming reality. CMTA urges you to help pass the referendum to repeal SB 2.
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