Even as California's healthcare community mourned last week's defeat of Proposition 72, the razor-thin margin on the sweeping health insurance mandate gave hope to advocates in at least one other state with plans for a similar measure.
Prop. 72 was a referendum put on the ballot by business interests seeking to overturn the state's Health Insurance Act of 2003, signed in the waning days before former Gov. Gray Davis' recall. The law would have required businesses with 50 or more employees to provide health insurance coverage for their workers or pay into a state purchasing pool that would do so. Passage of Prop. 72 would have upheld the law; its defeat now effectively rescinds the law.
The opposition, led by the California Chamber of Commerce and backed by well-known companies such as Target, McDonald's, Sears and Wal-Mart, said the law would cost firms $7 billion per year and drive jobs out of the state.
But supporters, which included consumer groups, unions and the California Medical Association, said the law would have extended coverage to 1 million of the state's 6.4 million uninsured and saved taxpayers hundreds of millions of dollars by cutting the number of California workers forced to seek costly treatment at emergency rooms or enroll in government-funded programs such as Medicaid. Of the 9.1 million Californians employed by large or midsize companies last year, 1.7 million were uninsured and 406,000 were on Medicaid, according to a report by the California HealthCare Foundation.
"It's disappointing that the opposition, which was funded largely by out-of-state corporations, could hijack a local proposition and defeat the will of the California people," said Peter Warren, spokesman for the CMA, which suffered a double blow last week as voters defeated another CMA-backed initiative that would have raised $500 million per year to reimburse providers for uncompensated emergency care.
Warren said supporters were regrouping to consider how best to pursue health reform in the state Legislature.
Meanwhile, a coalition of consumer groups, providers, businesses and labor in Washington state plan to introduce a near-identical "pay or play" bill during the state's next legislative session, which begins in January. Robby Stern, special assistant to the president of the Washington State Labor Council, which oversees the effort, said the coalition was heartened that Prop. 72 lost by only the slimmest of margins-50.9% to 49.1%, or a difference of 161,500 votes. "The fact that it lost by less than 1% in a race that involved more than 9 million voters shows how seriously people are taking the issue," Stern said. "And we have the benefit of having learned lessons from watching California."
The in-the-works bill, endorsed by Washington Insurance Commissioner Mike Kreidler, would expand coverage to roughly 180,000 of the state's 900,000 uninsured, Stern estimated. Unlike the California initiative, he added, it has already garnered support from the local business community because it would incorporate cost controls for employers.
Groups in Massachusetts are also said to be considering a push for similar legislation.
In the meantime, officials in Hawaii, the only state to have a mandated-insurance law on its books, next month plans to begin randomly auditing companies to ensure they are complying with the Prepaid Health Care Act of 1974, which for the past 30 years has required businesses to cover all employees who work at least 20 hours a week.
The state's actions were spurred by a report released last month by the Hawaii Institute for Public Affairs showing one-fourth of the state's 120,000 uninsured are adults working more than 20 hours a week. Once as low as 2%, Hawaii's uninsured rate has ticked back up to 10% at least partly because employers are finding ways to skirt the law, said Nelson Befitel, director of Hawaii's Department of Labor and Industrial Relations.
"Previously, inspections were only triggered by complaints," he said. "We hope our new enforcement efforts serve as a deterrent for companies tempted not to comply and help ensure that employees who are entitled to insurance receive it."
Befitel said companies in Hawaii, which are restricted from shifting a greater percentage of their benefits costs onto workers, have grown increasingly frustrated by the law as premiums have climbed at double-digit rates. And if the battle over Prop. 72 is any indication, states hoping to follow Hawaii's lead could face an equally uphill battle.
Both sides of the Prop. 72 debate fought a bitter, well-financed campaign in the media. The opposition, which raised $16 million in contributions-ran TV ads warning the mandate would raise prices and "force employees into government-run healthcare," as more companies dumped workers into the state insurance pool rather than face the cost and hassle of providing coverage themselves. Proponents, who raised $14.5 million, countered with an ad featuring Richard Corlin, a California gastroenterologist and past president of the American Medical Association, who assured viewers Prop. 72 was not socialized healthcare, but "simply requires ... companies to pay for private coverage."
Supporters then upped the ante in October with another ad that alleged state taxpayers last year shouldered $32 million in healthcare costs for Wal-Mart workers "who went to public clinics because the company won't provide affordable health coverage." The retail giant, which vigorously disputes the claims, countered with a $500,000 contribution to defeat Prop. 72 and its own ad featuring a Wal-Mart worker whose company insurance covered his son's treatments for liver disease.