In my last post, I talked about how AB8(Nunez/Perata) was a better deal for employers than 2003’s SB2(Burton), less burdensome yet more comprehensive. For those employers that provide coverage, and those that want to, it provides a new, affordable option for them.
How about in comparison with the Governor’s proposal? Many reports simply compare the minimum employer contributions in the two plans, 4% in the Governor’s plan, 7.5% in the legislative leader’s plans. Especially since most employers are spend 8-14% of payroll, it seems superficially that the Governor’s plan lets employers off much easier.
But the real question is what employers get in return. As consumer advocates, we just don’t argue for the lowest price, but the best value for the dollar.
Under the Governor’s plan, those employers that don’t provide any health coverage would have to pay a 4% fee. But they wouldn’t get any special added value whether they paid the fee or not. The Governor’s plan does broadly expand public coverage programs for families up to 250% of the federal poverty level, around $25,000 a year for an individual, or $50,000 for a family of four. For those employers who don’t provide coverage and thus pay the fee, their workers over 250% of the poverty level are left to buy coverage on their own.
In contrast, under AB8, the employer who doesn’t provide private coverage and pays the 7.5% fee gets to cover his entire workforce (including full-timers and part-timers) through the statewide purchasing pool. That employer gets the benefit of a fully-insured workforce, one that is healthier, more productive, and has less turnover and thus fewer retraining costs.
Most employers have workers at a range of incomes, from entry-level and lower-skill workers to managers and specialists. For these employers, the structure of AB8 seems to be a much better value.
Of course, if the employer doesn’t want to provide any coverage, then these details don’t matter: they will simply oppose any reform. But for the vast majority of employers that do, or that want to, provide coverage, these different structures of the proposals make a difference, much more than a comparison of 4% and 7.5%.