California HealthCare Foundation Adds Analysis of Legal Issues to SB 2 Resource Site.

Business Editors/Health/Medical Writers

OAKLAND, Calif.--(BUSINESS WIRE)--March 3, 2004

Web Page Provides Facts, News, and Perspectives on

Historic Health Insurance Act of 2003

To assist those interested in the California Health Insurance Act of 2003, also known as Senate Bill 2 (SB 2), the California HealthCare Foundation (CHCF) has compiled facts and resources on the controversial measure at www.chcf.org. In accordance with CHCF's standard policy, the Foundation does not take a position on the legislation.

Governor Gray Davis signed SB 2 in October 2003. This "pay or play" measure would require California employers to pay a fee to the state to provide health insurance unless the employer provides coverage directly. Participation requirements vary with firm size; the smallest firms are exempt. Under SB 2, an employer is entitled to a credit against the fee if it provides coverage to employees (and dependents, in the case of firms with 200 or more workers) that meet the minimum requirements of SB 2.

The legislation's first test is a voter referendum on the November 2004 ballot, which asks whether the measure should be repealed. In addition, SB 2 could face legal challenges both on the federal and state levels. Newly added reports on CHCF's site explore such issues and include:

-- ERISA Implications for SB 2. This newly updated brief analyzes

issues raised by the 1974 federal Employee Retirement Income

Security Act (ERISA), which may preempt certain provisions of

the Health Insurance Act (SB 2). ERISA contains a broad

provision designed to preempt all state laws that attempt to

regulate employee benefit plans sponsored by private-sector

employers or unions. The brief reviews relevant court cases,

raises several possible preemption problems, and outlines the

central arguments supporting and opposing SB 2. For those

interested in further detail, a full report is also available.

-- California Constitutional Barriers to Implementation of SB 2.

The California Constitution requires the state legislature to

enact a tax increase by no less than a two-thirds majority

vote of both houses. Opponents of SB 2 argue that the fee

imposed on employers to fund the public health insurance

program is a tax, and that SB 2 did not receive the two-thirds

majority votes. Supporters argue that SB 2 requires a fee,

which is not a tax. Using case law, notably Sinclair Paint v.

Board of Equalization, where the court considered the

circumstances under which fees could be imposed on businesses,

this brief provides an understanding of how the California

courts have interpreted the constitution's tax provisions,

which may be helpful in assessing the constitutional

vulnerability of the fee imposed by SB 2.

-- State Employer Health Insurance Mandates: A Brief History.

Employer mandates have been incorporated into major health

reform efforts in a number of states, but only one state

(Hawaii) currently requires employers to offer health

insurance to their workers. This report compares California's

current SB 2 measure with key mandate provisions in Hawaii and

other states that have attempted to mandate employer-based

coverage but encountered political and economic obstacles,

including Massachusetts, Oregon, Washington, and California.

Do past efforts hold the key to success for SB 2?

Early estimates indicate that as many as one million uninsured Californians could be covered under the plan. At the same time, the legislation imposes significant new costs on businesses not offering health insurance; figuring out the costs involved and ways to control them is imperative, particularly in an era of soaring premiums.

In addition to the newly added reports, the CHCF SB 2 resource site has recently been redesigned and updated with information including:

-- An overview and basic facts of the SB 2 measure including who

would be covered; how the process would work; how SB 2 would

affect the uninsured; how firms would be affected; and legal

issues and challenges.

-- Updates on SB 2-related news coverage.

-- Links to the final text of the legislation and legislative

analyses of SB2 and a related measure, AB 1528.

-- Resources on SB 2 from organizations such as the UCLA Center

for Health Policy Research, the Kaiser Family Foundation, and

others.

About the California HealthCare Foundation

The California HealthCare Foundation (CHCF) is an independent philanthropy committed to improving California's health care delivery and financing systems. Visit www.chcf.org for more information.