Healthcare crisis looms large over political landscape

By CMTA Staff

Capitol Update, June 2, 2006 Share this on FacebookTweet thisEmail this to a friend

The rising cost of healthcare (8 percent in 2005) and the alarming number of Californians without health insurance (6.5 million) guarantees that healthcare reform will stay on the political agenda. In the meantime, some employers are reducing employee benefits and putting more of the premium costs on employees. Increasingly, employees are declining coverage rather than paying their share of the benefit. Medical costs they can’t afford are passed along to others in the form of higher premiums.  

Cost increases are also blamed on inappropriate use of emergency rooms, over-utilization of services, lack of electronic medical records that can reduce medical mistakes.  Other factors include state laws that mandate all health plans to cover certain drugs, conditions and procedures, seismic retrofitting requirements for hospitals, patient disconnect from actual cost of care, and the high cost of advancing technology.  

Proposed "solutions" to the problem of the uninsured have focused mostly on mandating coverage through employment. Health care cost-control and individual responsibility have not been major elements in the reform proposals. The unsuccessful efforts to date include SB 2 (John Burton, D-San Francisco) in 2003, Proposition 72 in 2004, SB 840 (Sheila Kuehl, D-Santa Monica) in 2005, SB 1414 (Carole Migden, D-San Francisco) in 2006, and AB 1952 (Joseph Nation, D-San Rafael) in 2006.  Only AB 1952 proposed more than just shifting the cost burden to employers.  

Labor unions were the main backers of Proposition 72 and they may push an employer health insurance mandate in the 2007-2008 legislative session.  If that bill fails, we could see an initiative on the ballot in 2008. Also, the inability of Congress to deal with the issue on a national basis has prompted many states to craft their own plans and these are being studied for possible use in California.   

To put the issue in perspective from the employer’s point of view, workers’ compensation costs rose to over 6 percent of payroll before a crisis point was reached and reforms were enacted. Many CMTA employers are now paying 3 times that amount (15-20 percent of payroll) for employee health care insurance. Unlike workers’ compensation, employers have the option to reduce healthcare benefits to control their costs and many are using that option.

CMTA does not support a mandate on employers in California when the manufacturing industry is struggling with the already burdensome costs of energy, land, workforce development and other labor related costs.  If California is going to remain competitive in attracting new manufacturing jobs to the state, this problem cannot be solved on the backs of employers. 
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