Requires a health care service plan that covers outpatient prescription drug benefits to provide coverage for inhaler spaces, nebulizers, and peak flow meters when medically necessary for the management and treatment of pediatric asthma
Institute of Governmental Studies University of California Berkeley
The November 2004 election ballot will include Proposition 72, a referendum that seeks to repeal the Health Insurance Act of 2003 (SB2) passed by the legislature and Governor Gray Davis (see bill documents associated with SB2). The Health Insurance Act requires companies with 200 or more employees to buy health insurance for workers and their families by 2006. Firms with 50 to 199 employees are required to buy coverage for their employees starting in 2007. Click here for under 50 employees. A YES vote on Proposition 72 will approve the Health Insurance Act, while a NO vote will repeal it.
California lawmakers passed a groundbreaking health insurance measure early Saturday that would require small businesses to provide coverage to 1 million of the state's working poor, who now rely on tax-supported programs for medical care.
employers with fewer than 20 workers would be exempt.
strong support has come from doctors, insurance companies and unions that argue that the insurance would save taxpayers $650 million to $1 billion in costs they are now billed through Medi-Cal, the state health program for the poor and disabled.
Advocates of the bill have forecast that the measure would produce almost immediate savings for taxpayers and insurance ratepayers because low-income people who now go to expensive emergency rooms for care would have their own private insurance. Currently, taxpayers and health-care providers pay the tab for virtually all those costs.
McClintock, who added that the bill would cost California jobs.
The Legislature sent a bill to the governor that would require many California employers to offer health insurance to their workers. The bill, SB 2, can be read at http://www.senate.ca.gov. Here's a look at some of the details of the bill:
• Employers with at least 20 workers, but fewer than 50, would have to provide health insurance only if the Legislature also passed a 20% tax credit for those firms.
• If they chose to provide coverage, employers would be required to pay at least 80% of the cost of the policy, with the workers paying the rest.
The California Health Insurance Act of 2003 is historic legislation that opens a new chapter in the discussion over how to provide health care coverage for the uninsured. In accordance with our standard policy, the California HealthCare Foundation did not take a position on the legislation. To assist those interested, we have compiled the following fact sheet and resources (see below). This resource area will grow as we track the course of the new law and analyze its impact. To register for updates, click here.
For a print-friendly version of the following fact sheet, click here.
The Health Insurance Act of 2003: An Overview of SB 2
The Health Insurance Act of 2003, or Senate Bill 2 (SB 2), is a "pay or play" law that requires California employers to pay a fee to the state to provide health insurance unless the employer provides coverage directly, in which case the fee is waived. The bill was passed by the legislature on September 12, 2003, and signed by Governor Davis on October 5, 2003.
Who Will Be Covered under SB 2?
Eligible employees are those who have worked for an employer for three months, and work at least 100 hours per month.
Firms with 200 or more California employees are required to participate beginning January 1, 2006; coverage is required for both workers and their dependents.
Firms with 50 to 199 California employees are required to participate beginning January 1, 2007; coverage is required for workers but not dependents.
Firms with 20 to 49 employees are exempt unless the state of California provides a tax credit to those firms equal to 20 percent of the employer's net cost of the fee.
Firms with fewer than 20 employees are exempt.
How Does SB 2 Work?
Firms are required to pay a fee to a state fund for each eligible worker. Firms offering coverage that meets the minimum requirements of the bill will receive a credit against the fee.
The State Health Purchasing Fund will be newly created and administered by the Managed Risk Medical Insurance Board (MR MIP), which also manages California's Healthy Families program. MR MIP will set the fee and establish enrollee cost-sharing requirements (deductibles, co-insurance, and copayments).
Employers that prefer to "play" (offer coverage) may apply to the Employment Development Department (EDD) for a credit against the fee. Coverage offered through the Department of Managed Health Care (DMHC) meets the requirement, as does coverage offered through the Department of Insurance as long as maximum out-of-pocket costs do not exceed those offered through DMHC-regulated preferred provider organizations (PPOs). Accident-only, hospital indemnity, and other limited benefit plans do not qualify.
Employers and employees are required to share the costs of coverage. Employers are required to contribute at least 80 percent; workers must contribute the remaining amount, up to 20 percent. Worker contributions are capped at 5 percent of wages for low-income workers (defined as up to 200 percent of the Federal Poverty Level, about $18,000 for an individual or $30,500 for a family of three).
MR MIP will coordinate coverage for those eligible for Medi-Cal and Healthy Families.
A related law, AB 1528, establishes a Health Care Quality Improvement and Cost Containment Commission that will report to the legislature by January 1, 2005, and make recommendations for health care cost containment.
Market rules currently in place in the small group market (2 to 50 workers) will be expanded to cover firms with 51 to 199 workers, though a rate band of +/-15 percent will be applied rather than the +/-10 percent bands which currently apply in the small group market. (Rate bands restrict the range of prices health plans may charge based on the risk profile of the employer group.) In addition, health insurers may offer different products to firms with 51 to 199 workers than they offer to firms with 2 to 50 workers.
How Will SB 2 Affect the Uninsured?
UCLA's Center for Health Policy Research estimates that, of a total of 4.5 million uninsured Californians, the legislation will affect 860,000 workers and dependents when implemented for firms with 50 or more workers (about 18 percent of California 's uninsured). If implemented among firms with 20 to 49 workers as well, the number of Californians affected is estimated at 1.1 million.
How Will Firms Be Affected?
According to the Kaiser Family Foundation/Health Research Educational Trust (KFF/HRET) 2002 survey of California firms, 94 percent of firms with 50 to 199 workers and 99 percent of firms with 200 or more workers offered health insurance. The remaining firms will be required to pay the fee if they choose not to begin offering coverage.
Other firms already offer health insurance, but will be required to increase their contribution in order to meet the 80 percent requirement.
About 80 percent of firms with more than 50 workers contribute at least 80 percent of the premium for worker coverage. As a result of the legislation, the remaining 20 percent would need to upgrade their contribution to 80 percent (KFF/HRET).
Only about half of firms with 200 or more workers pay the required 80 percent premium share for family coverage; the other half of firms would need to increase their premium share (KFF/HRET).
Estimates of the costs that may be incurred by firms in California as a result of SB 2 vary from $1.3 billion (California Medical Association) to $11.3 billion (Employment Policies Institute). Labor market effects are uncertain. Opponents predict that many employers not currently offering health insurance will lay workers off or leave the state, while supporters argue that the majority of those employers are in locally based service industries and that the new requirement levels the playing field for firms already offering coverage.
What Happens Now?
MR. MIP is planning for SB 2 implementation, but opponents of the legislation may challenge it through one or more routes:
A state lawsuit that claims the "fee" is actually a tax that did not receive the required two-thirds majority vote in the legislature.
A federal lawsuit that claims the law violates the Employee Retirement Income Security Act of 1974 (ERISA), a federal law pre-empting states from regulating employer benefit plans.
A referendum to repeal SB 2 may be presented to the California voters. The California Chamber of Commerce has filed the required paperwork and would need about 375,000 signatures in order to place the measure on the ballot.
A coalition of business groups (including the California Chamber of Commerce, the California Restaurant Association, and the California Retailers Association) is seeking to overturn SB 2 by referendum. The referendum will appear on the November 2004 voters ballot. Find out more about this campaign at the Stop the Healthcare Tax site - no longer up.
Public Opinion Polls
A January 23 survey by The Field Poll measured voter awareness and opinion of SB 2. The poll found that while less than one in three voters (31%) are aware of SB 2, a large majority (65%) supports the measure’s basic provisions after they are described. See The Field Poll results online.
The California Partnership, an organization focused on building an anti-poverty movement in California, has issued a fact sheet about the impact of SB 2 on California's lowest-income workers.
The California Managed Risk Medical Insurance Board has been tasked with implementing SB 2. The public is welcome at the Board's monthly meetings. Meeting agendas and information on SB 2 are available at the MRMIB site.
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