Businesses bristle at insurance requirement

Alicia Robinson

When California voters go to the polls on March 2, they could see a

referendum to block a state law that would require larger businesses

to provide health insurance to their workers.

Local business owners and organizations said the law is a concern,

but mostly as part of a pattern of overall government mandates that

are driving up the cost of doing business.

“It’s kind of like wading out into the ocean and being hit by one

wave after another,” said Julie Puentes, Orange County Business

Council spokeswoman.

The new law, the Health Insurance Act of 2003, would require

businesses with 200 or more employees to begin providing health

insurance to employees in 2006. Businesses with 50 to 199 workers

would have to offer health coverage in 2007. Firms with 20 to 49

workers will be exempt unless the state provides a tax credit

covering part of the employers’ costs, and businesses with fewer than

20 workers are fully exempt.

A group of business organizations on Monday submitted petitions

with more than 620,000 signatures to place a referendum of the law on

the March ballot.

Puentes said she doesn’t know how many of the 300 businesses of

varying sizes represented by the council would be affected by the

law.

Most of the questions and concerns she’s heard are about

cumulative increases in the cost of doing business, she said.

Companies are taking multiple hits in the form of rising worker’s

compensation costs, expected 2004 increases in unemployment insurance

and annual cost increases for businesses that do provide health

insurance, she said.

Also, “businesses are still reeling from the energy crisis,”

Puentes said. “We don’t hear about it now, but it’s one of those

things that’s kind of looming in the background as a concern.”

Juggling healthcare costs and state-mandated taxes and fees is a

worry for Randy Garell, president of Grant Boys, the Costa Mesa

outdoor and sport gear store.

“All of those things, you mix it in and you say at the end of the

month, ‘Gee, there’s no profit left. Why am I doing this?’” he said.

Garell has 18 employees whom he provides health insurance with,

but he’s absorbed double-digit increases for that coverage each of

the last two years, and he has had to reduce coverage for himself and

his wife to avoid asking his staff to pay more for their benefits.

The Costa Mesa and Newport Beach chambers of commerce opposed the

new health insurance law, but neither has taken an official position

on the referendum.

Costa Mesa Chamber President Ed Fawcett said the law is another

instance of the state telling businesses how to operate.

“I wouldn’t choose to have them run my business, and that’s what

they’re doing,” he said. “The state has already proved that they

don’t know diddly squat about how to spend their own money.”

According to information from the Costa Mesa Chamber of Commerce,

of the 5,111 businesses operating in the city the overwhelming

majority -- 4,830 businesses -- employ from one to 49 people. That

leaves 281 Costa Mesa businesses that could be affected by the law.

How many of those businesses would have to make changes is

uncertain. A national survey by the Kaiser Family Foundation showed

that of companies surveyed in 2003, 95% of those with 50 to 99

employees already provide some health insurance to workers, and 98%

of businesses with 200 or more workers provide health benefits.

For those that would have to make changes, one inevitability

looms, officials said: deciding whether layoffs are necessary.

* ALICIA ROBINSON covers business, politics and the environment.

She can be reached at (949) 764-4330 or by e-mail at

[email protected].