What’s Fair For Employers

(Excerpted from material provided by California Labor Federation)

The healthcare reform proposals by Governor Schwarzenegger, Speaker of the Assembly Nunez, and President Pro Tem of the Senate Perata all include a requirement for employers to share healthcare costs. The level of employer responsibility is different in each proposal, however.

How the Proposals Compare:

Amount of contribution: The proposals by Assembly Speaker Nunez and President Pro Tem Perata will require employers to pay a fee or spend a percent of payroll: neither has yet determined the level of the fee. The Governor’s proposal sets the fee at 4% of payroll.

Which employers are covered: Senator Perata’s proposal includes all employers, while Assemblymember Nunez’s proposal exempts employers with under 3 employers, less than $100,000 in payroll, and less than 3 years in operation. The Governor’s proposal excludes employers with ten or fewer “full time equivalent positions.”

Concerns with the Current Proposals:

The requirement for employer contribution must set the bar high enough to be meaningful. Under the Governor’s proposal, employers who don’t pay for healthcare will be required to contribute 4% of payroll to a purchasing pool. This level, 4%, is lower than what most employers contribute. California employers currently pay an average of 8-10% of payroll for employee healthcare.

Employer-provided health care should meet standards for quality and coverage. Under the Governor’s proposal, employers would meet their obligation by paying 4%, but employees would not be guaranteed affordable, good coverage.

Employees of small businesses should be protected. Under the Governor’s plan, employers with ten or fewer “full time equivalent positions” (positions that add up to the working hours of 10 full time employees) are exempted from the employer mandate, but all individuals will be required to buy coverage.