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Health-care plans don’t address employer costs

Two years ago voters rejected the idea of mandating employers to provide health care by opposing Proposition 72. While the California Restaurant Association was an opponent of the measure, our opposition was not to universal health care but to the idea that employers should bear most of the costs to fund a societal goal that will benefit all Californians, working or not.
Unfortunately, all of the legislative plans thus far have the same vital flaws. Each contains an employer mandate and a seeming unwillingness to address the true problem of the uninsured and health care in California: cost.
They all speak of shared responsibility, but by proposing an employer mandate they are disproportionately targeting the small businesses of California. An employer mandate to provide health care will disproportionately burden small, labor-intensive businesses in low-margin, entry-level wage industries such as restaurants, as compared to high margin, very profitable businesses such as law firms.
The average independent small restaurant employs a large work force and earns less than 5 percent annual net revenue. The more employees a business has relative to income, the greater the economic burden becomes when measured as a percentage of payroll. As a result, proposals requiring employers to provide health insurance force the greatest sacrifice from those businesses least able to pay. And this is on top of the recent minimum-wage increase that many small businesses are trying to cope with.
Some elected officials would have you believe that there are good employers who offer health care and bad employers who do not. In reality, it is the
double-digit increases in health-care premiums that divide California employers into those who can afford the out-of-control costs and those who cannot.
While each plan calls for cost controls and containment within the health-care industry, all plans are merely “theories” with unquantifiable future benefits. Even if some of the cost-control proposals in the three plans materialize, they are years away from fruition and there are some huge cost drivers that are impossible to control, such as the graying of California’s population. In other words, all three proposals seem to be asking small businesses to pick up a good portion of the tab for a broken health-care system on the mere promise that costs will be brought under control and the quality of health care will be improved.
If you look at the quick and loud responses from the various stakeholders to the three plans, it reveals that individuals, business and the health-care industry can’t afford to pay for the existing health-care system in California. Unless the Legislature and the governor truly fix the runaway costs, all three plans are proposing an unbearable burden that may only break the economic back of those small businesses that represent “Main Street” California.


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