Calif. group may challenge new insurance mandate

The California Chamber of Commerce said it is considering legal action against a new state law requiring larger employers to provide their workers with health insurance. The law, signed yesterday by California Gov. Gray Davis, requires businesses with 200 or more employees to provide health insurance for workers and their families beginning in 2006 or pay a fee for the employees to receive coverage through a state-run program. In each case, the employer would pay 80% of the cost and the employee 20%. The chamber believes the new law is effectively a tax on employers and employees and should have passed the legislature on a two-thirds vote instead of a simple majority, chamber President Allan Zaremberg said in a written statement. Zaremberg called the new law a "job killer." The state Assembly and Senate approved the proposal by votes of 46 to 32 and 25 to 15, respectively. In signing the law, Davis said it would ease the burden the uninsured place on the economy. Under the law, the mandate will be expanded in 2007 to companies with 50 to 199 employees and to firms with 20 to 49 employees if and when a state tax credit is approved. The law is expected to bring health insurance to an estimated 1 million uninsured workers. -- by Patrick Reilly