Major Health Care Mandate Derailed

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

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

Two major employer health care mandate bills were heard in late June in the Assembly Health Committee. CMTA succeeded in defeating one of them.

SB 1192 (Wesley Chesbro, D-Arcata) would require employer health care service plans to provide coverage for substance-use disorders on the same basis as for any other medical care. It failed passage and was held in committee. CMTA opposes state mandates on employee health plans because they interfere with an employer's ability to manage employee benefit costs.

SB 1192 would increase employer costs by restricting their ability to design health care plans that are affordable for employers and employees and are tailored to the needs of their employees. One of the few remaining ways to control health care cost is to negotiate health plan coverage and payment rates with HMOs, PPOs, etc., within their closed systems. This bill would negate cost containment provisions that limit access and duration of treatment in these plans by requiring a plan to cover substance-use disorders on the same basis as it provides for any other medical care.

Beyond the cost impact, CMTA is concerned that this provision would eliminate any incentive on the part of the enrollee to control their abusive or illegal behavior. They would have unrestricted access to treatment at little or no cost to them. The bill could also require employers to violate the "drug free workplace" requirement that would make the employer ineligible to contract with state or federal government. But even more important, it could undermine workplace safety, increase production cost and drag down morale when co-workers are repeatedly exposed to the uncertain condition of alcohol or illegal substance abusers.

SB 921 (Sheila Kuehl, D-Santa Monica) was passed by the committee. The bill would create a single payer health care coverage program for all California residents (whether they wanted it or not). The system would provide a one size fits all health care benefits package with no regard to individual needs or preferences.

CMTA is opposed to the bill because most employers design their health insurance programs as a part of their overall compensation and benefits program in a manner to attract and retain good employees. SB 921 ignores this concept, requiring a generic plan forced upon employees and employers without regard to the needs and affordability of the plan to employers and employees.

SB 921 would create the largest state health care bureaucracy in the nation, second only to the federal Medicare program that would be managed by an elected Health Care Commissioner. The program would be funded by a personal income tax for health care on earned and unearned income, an employer payroll tax and a self-employed business tax. However, based on the performance of existing state agencies, there is no reason for employees and employers to believe that this new giant bureaucracy would operate the second largest health care program in the nation in an efficient and cost effective manner.

Employers are especially concerned because the bill prohibits the use of any co-pay and allows unending access to treatment and prescriptions drugs. All California residents are eligible and new arrivals physically present in the state who indicate only an intent to reside in California would also be eligible. With such liberal access policies and lack of effective cost controls, employers believe that program costs will spiral out of control and the program will collapse under its own expensive weight.

SB 921 is currently in the Assembly Appropriations Committee with no hearing date scheduled.
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