Proposition 72: Health Care Coverage Introduction California Health Insurance Act of 2003 (SB2) Legal Challenges Proponents of the Health Insurance Act Opponents of the Health Insurance Act Official Voter Information Selected Websites Public Opinion Selected Articles and Reports Recommendations by Organizations and Newspapers Other Nov. 2004 Ballot Propositions December 2004 Final update of text and links.

LIBRARY Institute of Governmental Studies University of California 109 Moses Hall #2370  Berkeley, CA 94720-2370  510-642-1472 (voice)  510-643-0866 (fax) Statewide Returns from the California Secretary of State: Prop. 72: Support 49.1%, Oppose 50.9%

The November 2004 election ballot includes Proposition 72: Health Care Coverage, a referendum on 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. A YES vote on Proposition 72 will approve the Health Insurance Act, while a NO vote will repeal it.

Californians have long debated the merits of proposals to expand health insurance coverage. In 1945 Governor Earl Warren recommended the creation of a compulsory prepaid medical service based on payroll deductions from both employer and employee, a plan that was ultimately defeated by the legislature. In 1992 the California Medical Association (CMA) proposed the California Affordable Basic Health Care Act, requiring all employers in the state to provide health insurance for workers and their families. The proposed legislation, SB248, passed the Senate but stalled in the Assembly. In the 1992 general election CMA sponsored a similar plan as Proposition 166. It was defeated by a two-to-one margin.

By 2002 about 6.4 million Californians, or 18.2 percent of the state's population, lacked health insurance. Senators John Burton and Jackie Speier introduced Senate Bill 2 (SB2), which sought to extend health care to about 1 million uninsured Californians. After intense debate SB2 was passed in the final hours of the 2003 session, and signed by Governor Gray Davis just 48 hours before the special election that resulted in his recall.

California Health Insurance Act of 2003 (SB2)

SB2 is a "pay or play" measure that requires 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.

The act includes the following key provisions:

• By January 2006, firms with 200 or more employees must provide state-approved coverage for employees and their dependents or pay a fee to the state. By January 2007, firms with 20 to 199 employees must provide coverage for employees only. Firms with fewer than 20 employees are exempt.
• The legislation exempts firms with 20 to 49 employees from the requirements unless the state provides a tax credit for those firms equal to 20 percent of the employer's net cost of the fee.
• The Employment Development Department will collect the fee from firms that do not offer qualified coverage. To receive credit against the fee, employers must demonstrate coverage of their workers under: (1) health care service plans regulated by the Department of Managed Health Care; (2) group health insurance policies regulated by the Department of Insurance, with limits on out-of-pocket costs; (3) Taft-Hartley health and welfare funds or other collective bargaining agreements.
• Self-insured employer-sponsored plans meeting ERISA requirements, multiple employer welfare arrangements regulated by the Department of Insurance, and coverage for public employees also qualify if they meet the benefits required under items 1 or 2 above.
• The Managed Risk Medical Insurance Board (MRMIB) will administer a new State Health Purchasing Program, which will be responsible for negotiating coverage on behalf of employees and dependents who do not receive coverage through their employer.
• Employer fee to be established by MRMIB based upon estimated coverage costs for all enrollees and dependents.
• Employers providing health coverage receive credit against the fee.
• Employers must contribute at least 80 percent of the cost of coverage. Employee out-of-pocket financial contributions cannot exceed 5 percent of wages for workers below 200 percent of the Federal Poverty Level. MRMIB will establish maximum levels of employee cost-sharing (premiums, deductibles, co payments).

Legal Challenges

Opponents of SB2 may initiate court challenges along two lines: a state lawsuit may claim that the legislation violates the California Constitution, and a federal lawsuit may point to conflicts with the federal Employee Retirement Income Security Act of 1974 (ERISA).

The California Constitution requires that a two-thirds majority of both houses of the state legislature approve any tax increase. Opponents argue that the fee imposed on employers to fund the public health insurance program is a tax, and that SB2 did not receive the two-thirds majority vote. Supporters dispute that the fee is legally a tax. For an analysis of the constitutional vulnerability of SB2, see the California HealthCare Foundation's California Constitutional Barriers to Implementation of SB 2.

Opponents of SB2 also contend that the 1974 federal Employee Retirement Income Security Act (ERISA) preempts certain of it's provisions. A detailed analysis of the legal issues is at the California HealthCare Foundation's ERISA Implications for SB 2.

Proponents of the Health Insurance Act

Opponents of the Health Insurance Act

Official Voter Information

Via the California Secretary of State. The text, legislative analysis and ballot arguments are from the Official Voter Information Guide. Campaign finance data is from the Cal-Access database of campaign receipts and expenditures.

Text
Legislative Analysis and Ballot Arguments
Campaign Finance:
Individual Campaign Committees
Total Contributions and Expenditures (select "Nov. 2004 election" and "Prop. 72 " in dropdown boxes)

Selected Websites

Public Interest Sites

League of Women Voters of California Education Fund
Impartial analysis of Proposition 72: In Depth and Pros and Cons

California Journal
Ballot propositions: Analysis of the November propositions by California Journal editors in the October issue.

California HealthCare Foundation
In accordance with its standard policy, the California HealthCare Foundation (CHCF) does not take a position on SB2 or the referendum to repeal it.

HealthVote2004.org
HealthVote2004.org provides voters with facts and non-partisan analysis, as well as easy access to information on who supports and opposes the measures, who is paying for the campaigns, how much is being spent, results of statewide polls, and the latest news. HealthVote2004.org is a collaboration between two non-partisan, non-profit organizations-the California HealthCare Foundation and The Center for Governmental Studies.

Advocacy Sites

California Chamber of Commerce

California Medical Association
CMA maintains an SB2 resource center at http://www.calphys.org/html/bb395.asp

California Partnership
See their Fact Sheet at http://www.california-partnership.org/sb2.htm.

Californians Against Government Run HealthCare
An extensive campaign website opposing SB2, with links to many articles and reports.
[Website archived in UCLA Online Campaign Literature Collection]

Employment Policies Institute
Includes a study on the Cost of California's Health Insurance Act of 2003.

Foundation for Taxpayer and Consumer Rights

Health Access
A statewide consumer health advocacy organization in support of SB2.

Yes on Prop 72
An extensive campaign website from Save Your Healthcare, with links to many articles and reports.
[Website archived in UCLA Online Campaign Literature Collection]

Public Opinion

"Times California exit poll results," Los Angeles Times Poll, Nov. 2, 2004.
Los Angeles Times Poll

"Health-Related Propositions: Support for Prop. 71, Stem Cell Research Bond, continues to grow. Voters moving to the No side on Prop. 72, Health Insurance Requirements," Field Poll, Release #2147, October 31, 2004.

"Los Angeles Times Poll Excerpts," Los Angeles Times Poll, Oct. 20, 2004.
Responses to questions on Propositions 63, 66, 67, 71, & 72.
Los Angeles Times Poll

"Health-Related Propositions: Prop. 72 (health coverage) ahead by 16 points. Prop. 61 and 63 also lead, but Prop. 67 trails," Field Poll, Release #2140, October 12, 2004.

"U.S. Senate race, key ballot measures," Los Angeles Times Poll, September 24, 2004.

Mark Baldassare.
“Support for open primary; health insurance referendum lags despite health care worries," PPIC Statewide Survey: September 2004.
See p. vi.

"Proposition 72: voters currently disposed to vote yes on referendum requiring health care coverage for employees working for large and medium-sized employers," Field Poll, Release #2127, August 12, 2004.

"Voters initially supporting health care coverage requirements referendum," Field Poll, Release #2119, June 8, 2004.

"Voters favor provisions of SB2, the Health Insurance Act of 2003. If a referendum to repeal SB2 qualifies for the ballot, both sides have potent arguments," Field Poll, Release #2104, January 23, 2004.

"Summary of polling data on SB2," The Feldman Group, Inc., October 2, 2003.

"SEIU-SB 2 health access, weighted questionnaire," The Feldman Group, Inc., September 12, 2003.

Selected Articles and Reports

The following citations include links to full-text online when available. For more info, see Tips for Finding Full-Text Articles.

Rapaport, Lisa .
"Health care fight not over: Congress may be the next battleground in efforts to cover the millions uninsured," Sacramento Bee, Nov. 8, 2004.
Access World News (UCB)

Kasler, Dale.
"Prop. 72's defeat demonstrates the political clout of Wal-Mart," Sacramento Bee, Nov. 6, 2004.
Access World News (UCB)

Silber, Judy.
"Prop. 72 defeat energizes debate: fight for expanded health care coverage for uninsured will go on, supporters promise," Contra Costa Times, Nov. 4, 2004.
NewsBank (UCB)

Gledhill, Lynda.
"Momentum swings against Prop. 72, voters oppose forcing employers to pay health costs," San Francisco Chronicle, Oct. 31, 2004.
San Francisco Chronicle

Stewart, Jocelyn Y.
"Supporting Healthcare Coverage for Workers, but Not Prop. 72: Opponents say forcing companies to pay for insurance would only make the business climate worse," Los Angeles Times, Oct. 29, 2004.
NewsBank (UCB)

Gledhill, Lynda.
"High stakes over health care initiative," San Francisco Chronicle, Oct. 28, 2004.
San Francisco Chronicle

Rojas, Aurelio.
"Giant retailer enters fight: Responding to attack ad, Wal-Mart gives $500,000 to defeat health care measure," Sacramento Bee, Oct. 27, 2004.
Access World News (UCB)

Silber, Judy.
"Workplace health care proposal could make history," Contra Costa Times, Oct. 26, 2004.
NewsBank (UCB)

[Opinion]
"Super-Sized Deception From Fast-Food Giants," Los Angeles Times, Oct. 24, 2004.
NewsBank (UCB)

Rau, Jordan.
"Hawaii Offers a Look at Mandatory Healthcare: the state's employers have long provided what Proposition 72 calls for, compulsory coverage," Los Angeles Times, Oct. 24, 2004.
NewsBank (UCB)

Rojas, Aurelio.
"Prop. 72 may boost clout of obscure state agency," Sacramento Bee, October 24, 2004.
Access World News (UCB)

Rau, Jordan.
"State May Point Way on Health Insurance: More employer-funded coverage can be expected nationwide if California passes Proposition 72," Los Angeles Times, Oct. 16, 2004.
NewsBank (UCB)

Raine, George.
"Businesses trying to repeal health insurance law," San Francisco Chronicle, Oct. 15, 2004.
San Francisco Chronicle

Hubbell, John M.
" 3 out of 4 health care measures doing well: Prop. 72 still ahead in new poll despite governor's opposition," San Francisco Chronicle, Oct. 12, 2004.
San Francisco Chronicle

Ainsworth, Bill.
"Prop. 72 support steady, but short of target to pass: Voters mixed on health," San Diego Union Tribune, Oct. 12, 2004.
NewsBank (UCB)

[Opinion]
"No on Healthcare 'Remedy'," Los Angeles Times, Oct. 9, 2004.
NewsBank (UCB)

Rojas, Aurelio.
"Worker benefit or job killer? Small-business owners say they can't afford 80% of health insurance costs," The Sacramento Bee, Oct. 4, 2004.
NewsBank (UCB)

Wells, Annette.
"Law could benefit hospital: Prop. 72 requires more health care," Sun, The (San Bernardino, CA), Oct. 4, 2004.
NewsBank (UCB)

Matier, Phillip and Ross, Andrew.
"Ad: Wrong place, and it's not hers: No on Prop. 72 TV ad uses actress, 'convenient' location," San Francisco Chronicle, Oct. 4, 2004.
San Francisco Chronicle

[Opinion]
"No on Proposition 72: Companies aren't solution to health crisis," The Sacramento Bee, Oct. 3, 2004.
NewsBank (UCB)

[Opinion]
"Why Prop. 72 Isn't the Answer," San Francisco Chronicle, Oct. 3, 2004.
San Francisco Chronicle

MacDonald, John A.
"Pivotal vote On health care: insurance law on California ballot," The Hartford Courant, Sept. 27, 2004.
NewsBank (UCB)

Garvey, Megan.
"Both gambling measures failing: but voters favor funding stem cell research and requiring businesses to pay for health coverage," Los Angeles Times, Sept. 24, 2004.
NewsBank (UCB)

"AdWatch: spot targets uncertainties of Prop. 72 ," Sacramento Bee, Sept. 15, 2004.
Access World News (UCB)

Lawrence, Steve.
"Schwarzenegger sides with business groups on two November props ," Associated Press, Sept. 10, 2004.
Associated Press

Swarts, Aaron.
"Labor day gathering focuses on Prop. 72," Oakland Tribune, Sept. 7, 2004.
Oakland Tribune

Rodriguez, Robert.
"Ensuring against costs: business groups seek repeal of health-coverage law," Fresno Bee, Sept. 5, 2004.
Access World News (UCB)

[Opinion]
"Vote yes on Prop. 61, but no on 67 and 72," San Jose Mercury News, Sept. 5, 2004.
Newsbank (UCB)

Felch, Jason.
"County feels symptoms of health crisis relapse," Los Angeles Times, Aug. 29, 2004.
NewsBank (UCB)

Kaiser, Rob.
"McDonald's fights try for paid health insurance," Chicago Tribune, Aug. 19, 2004.
NewsBank (UCB)

Hiltzik, Michael.
"Bizarre alliances form Prop. 72 opposition," Los Angeles Times , Aug. 16, 2004.
NewsBank (UCB)

Benson, Clea.
"Health measure gets early support: voters in poll back a law mandating health insurance," Sacramento Bee, Aug. 12, 2004.
Access World News (UCB)

California Medical Association.
The ER Crisis: Impact of the Uninsured on Emergency Care. Eureka: California Medical Association, July, 2004.

Weintraub, Daniel.
"Early polling is bad news for health-care mandate," Sacramento Bee, June 10, 2004.
NewsBank (UCB)

Lazarus, David.
"Health law faces big guns,"San Francisco Chronicle, June 2, 2004.
San Francisco Chronicle, NewsBank (UCB) ,

Jones, Gregg.
"Health bill wins Davis' oK," Los Angeles Times, Oct. 6, 2003, p. A1.
NewsBank (UCB)

The Health Insurance Act of 2003 (SB2): Updated Findings from the 2002 California Employer Health Benefits Survey. Menlo Park, CA: Kaiser Family Foundation, October 2003.

Lyons, Julie Sevrens.
"What health insurance bill means - Q & A: sizing up plan passed by legislature," San Jose Mercury News, Sept. 15, 2003, p. 1A.
NewsBank (UCB)

Ingram, Carl.
"California measure calls for health benefits: landmark legislation would require state's employers to buy insurance for workers," Los Angeles Times, Sept. 9, 2003, p. B1.
NewsBank (UCB)

Legislature considers proposals to cover the uninsured. Sacramento, CA : California Budget Project, 2003. (Budget Brief, Aug. 2003)
California Budget Project

Oliver, Thomas. R; Dowell, Emery B.
"Interest groups and health reform: lessons from California," Health Affairs, v. 13, no. 2 (Spring 1994), p. 123-141.
Health Affairs

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