Voters hold fate of California health insurance mandate

The law requiring businesses to "pay or play" could prove a model for other states, experts say.

By Joel B. Finkelstein, AMNews staff. Oct. 25, 2004.

Washington -- A California law that would require some employers to offer health insurance is facing a new challenge before it even goes into effect.

The employer mandate was signed into law in the waning days of Gov. Gray Davis' administration last year. It would require medium and large companies to provide a minimum standard of health coverage to employees or pay into a government-run program.

Failing to defeat the measure's passage through the Legislature, opponents spent $2.5 million garnering signatures to get a referendum on the November ballot. California voters now have a chance to reaffirm the law or veto it.

The law still might require some fine-tuning, but it keeps the issue of the uninsured on the table, said Jack Lewin, MD, executive vice president of the California Medical Assn., which supports the measure and is part of a coalition fighting for its reaffirmation.

According to estimates, the law would extend coverage to fewer than a million of the 4.5 million uninsured people in California.

The law, which would be phased in over several years, first mandates coverage among companies with 200 and more employees beginning in 2006 and companies with 50 to 199 employees in 2007. Ninety-nine percent of the former and 94% of the latter already offer their workers health benefits, according to a 2002 survey.

Employer groups complain that the law is poorly written and amounts to a new $7 billion tax on companies and their workers.