Legislation Looms

 

 

Small businesses -- like most everybody else -- are watching the healthcare reform debate at the state Capitol and wondering what will hit them next.

The 7.5 percent payroll tax in the compromise bill now being pushed by legislative leaders is simply unaffordable, small-business interests say. They are livid that a small-business exemption and requirement that all individuals buy insurance are out of the picture.

Gov. Arnold Schwarzenegger's proposed plan of shared responsibility is better, some small-business pundits say. It includes individuals and would exempt employers with fewer than 10 employees from a requirement to offer health insurance for their employees or pay 4 percent of payroll into a purchasing pool.

But there must be significant cost controls put in place to make either program affordable.

"We believe there needs to be universal coverage," said Scott Hauge, president of Small Business California, a nonpartisan, grassroots advocacy organization based in San Francisco. "But not through a single payer," he added, referring to another proposal moving through the Legislature.

"We do support an individual mandate and shared responsibility to solve the problem -- but there must be cost containment for it to work."

The debate is "more about access than affordability," said John Kabateck, executive director for the National Federation of Independent Business/California, which opposes any kind of employer or individual mandate.

How the debate will play out at the Capitol remains to be seen. The governor's plan is not written into any bill, but the Schwarzenegger administration appears to be calling the shots in private. A deal and a vote is not expected until close to the end of the legislative session Sept. 14.

If comprehensive reform doesn't happen this year, small-business interests support an expansion of government healthcare programs for children as an interim step.

workers' comp enforcement

Small businesses have other issues on their minds, too. One bill in the works would increase small-business bidding preferences for state contracts to 10 percent from 5 percent.

Mike Schedler, president of Hal's Auto Care in Sacramento, said he would love to see healthcare reform this year, but he's more concerned about workers' compensation enforcement.

Schedler will spend more than $20,000 this year on workers' comp insurance. Some of his competitors spend nothing, even though they are required by state law to buy coverage.

A booming underground economy where many businesses go without workers' comp insurance simply transfers the cost of covering as many as 1,500 new claims by injured workers a year to companies that play by the rules, business interests say. These claims end up in the Uninsured Employers Benefits Trust Fund at an annual cost of more than $20 million.

The fund gets its primary support from employer fees, so the issue has become a top legislative priority this year for businesses that comply with the law -- and pay the tab for those that do not.

A bill sponsored by Small Business California would go after businesses that are not complying with the law. Senate Bill 869 by Los Angeles Democrat Mark Ridley-Thomas was pending in the Assembly Appropriations Committee at press time.

The bill would require the Employment Development Department to report the names of California employers to the Workers Compensation Insurance Rating Bureau of California so they can be checked for workers' comp coverage. Those absent from the list would get letters. If there's no response, the state could charge a fine of $1,000 per employee.

"Fifty-three to 54 percent of the businesses that responded to our state survey this year say they are impacted by the underground economy," said Hauge, of Small Business California. "There is not a level playing field."

Sean Fisher, owner of Tile Outlet stores in Citrus Heights and Rocklin, said the inequity affects his bottom line. "I lose jobs all the time to people not paying workers' comp," he said.

While supporting increased enforcement, small-business interests oppose a bill that seeks to double permanent disability benefits available to injured workers, fearful that it would raise costs.

Legislative tug-of-war What small business wants

• SB 869 would crack down on businesses that are not providing workers' compensation insurance for their employees.

• AB 507 would establish a Web site for verifying whether an employer is insured for workers' compensation in the state.

• AB 608 increases small-business bidding preferences for state contracts to 10 percent from 5 percent.

• AB 1 makes more children eligible for government-sponsored health insurance.

What small business opposes

• SB 840 would provide universal healthcare coverage through a government-run, single-payer system.

• AB 8 is a joint legislative reform bill that would expand healthcare coverage through employer fees and government programs but without requiring individuals to buy insurance.

• SB 936 would increase the number of weeks permanent disability benefits are paid in each of the next three years, resulting in a doubling of benefits by the third year.