A bill requiring all employers with 50 or more workers to provide health insurance is expected to be signed by Gov. Gray Davis, but it could well be derailed before becoming law.
Business groups say they are preparing a challenge based on the federal Employee Retirement Income Security Act (ERISA), which prohibits state regulation of employee benefit plans. If that fails, they can lobby to have the law repealed, as Massachusetts businesses were successful in doing with a similar law passed in that state in the 1980s.
California's bill, passed Sept. 12, would require employers to cover their workers' healthcare or pay into a state fund to do so--a "pay or play" system similar to President Clinton's failed health reform of a decade ago.
The California Medical Association supports the bill. Observers say virtually all medical practices with a staff of more than 50 already provide coverage, and the mandate would bring in new reimbursement income for an estimated 1 million Californians.
But businesses calculate they would have to pay $4,382 per worker by the time the law goes into full effect.