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January 23, 2008

California health bill to mean higher business costs

Businesses in Novato and throughout California will face increased costs, and many employees will be required to buy healthcare if ABX11, the current California healthcare reform bill and its companion ballot initiative, are approved by the legislature and voters, respectively. According to several business organizations, that could mean everything from reduced hours to layoffs for small and medium companies, the majority of Novato’s business community.

The legislation, backed by Gov. Schwarzenegger and State Assemblyman Fabian Nunez, was scheduled to be heard this week in the California Senate, and a ballot funding initiative may be put before voters November of this year. If approved, by 2010 businesses will be subject to a “pay or play” system, either providing employees health insurance, or paying a variable payroll fee into a general pool for employees’ healthcare.

Coy Smith of the Chamber of Commerce said his organization had not taken an overt position on the proposal, but was in general agreement with the California chamber, CalChamber, which recently signed a joint statement with other groups opposing it.

“We don’t (take positions) sometimes on statewide bills … we’ve taken a passive position supporting the California chamber,” said Smith. “(The bill) could potentially increase insurance costs to small and medium-sized businesses, and it would have less of an effect on large businesses.”

Smith said that due to economic conditions, the timing of the measure was wrong.

“Clearly the economy is not as strong today as it was a year and a half ago. It’s not a time to be placing additional expenses or requirements on businesses,” he said. “It could potentially mean cutbacks and lay-offs and hiring freezes. It’d have a negative affect on the economy.”

Representatives of the Independent Business Alliance declined to comment on the issue, but Downtown Business Association president Denise Athas said she felt the bill would do more harm than good.

“The part that will affect small businesses are the employer fees, and if they do raise them 1 to 6.5 percent of payroll, that would be absolutely detrimental to a small business,” said Athas. “I’ve been doing a sort of a rough survey of businesses and where they are today, and all businesses are being affected by the economy. Any additional expense to the employer will put a much greater burden on them.”

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Posted by healthinsurance at January 23, 2008 09:56 PM