By Jordan Rau. Times Staff Writer (excerpt) SACRAMENTO — In the year since Gov. Gray Davis was recalled from office, some of his final legacies — including the higher car tax and driver's licenses for illegal immigrants — have been excised from California law as completely as Davis was removed.

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Now, one of the Democratic governor's last and most significant projects, a 2003 law that requires businesses with 50 or more employees to provide workers with health insurance, is embroiled in a fight for its life as Proposition 72 on the November ballot.

The California Chamber of Commerce and the state's restaurant and retail industries put the proposition on the ballot in an attempt to repeal the law, which has not yet taken effect.

A majority of "yes" votes would keep the law, while a victory for "no" votes would eliminate it.

The law would provide health coverage to 1.4 million of California's 5.3 million uninsured. Analysts say the referendum over it will have national reverberations, providing a clue to the American appetite for ambitious rejiggering of a healthcare system widely acknowledged to be a mess.

"Everybody is watching California," said Robert J. Blendon, a Harvard School of Public Health professor who studies politics and public opinion on healthcare issues.

"If it goes under in California, it's just going to say that there's not a will out there to ask employers to contribute, and all that's left is tiny tax credits and expanding children's coverage," he said.

"If it goes down, for a decade it won't show up on anybody's political policy agenda," he added.

Conversely, Blendon said, "If California hangs in, I think you'll see other states and future candidates nationally asking for employer contributions."

The fight over the proposition has been a $15-million affair so far. Businesses say the new mandates would bankrupt them or make them flee California. Supporters of the law argue it would alleviate the financial pressures on institutions that are uninsured people's last resorts: emergency rooms and California's public programs for the poor, such as Healthy Families, which insures children up to age 19.

So far, polls show the measure winning. A Los Angeles Times poll in September showed it ahead by a double-digit margin, and a Field Poll released Tuesday showed it ahead 45% to 29%, with 26% undecided.

Nationwide, healthcare expansions generally have been political poison, with the most notable failure being then-Presi- dent Clinton's 1993 plan.

Employer mandates in Massachusetts, Oregon and Washington in the late 1980s and 1990s were dismantled before they could go into effect.

Hawaii is the only state that requires all employers to provide insurance.

Such proposals have not fared any better in California since Gov. Earl Warren's effort to erect a statewide insurance system was defeated in the 1940s.

A ballot initiative to require employers to provide health insurance was overwhelmingly crushed in 1992, as was a more ambitious measure in 1994 that would have had the state set up a single-payer healthcare system.

Since then, the financial burdens on employers and workers have only gotten worse as healthcare costs have escalated far faster than inflation.

In California, which has the fourth-highest uninsured rate in the United States, healthcare plans cost an average of $3,096 for individuals and $8,508 for families last year.

In 1987, 64.6% of Californians received healthcare through their employers; last year, 57.1% relied on their companies, according to the California Health Care Foundation, an Oakland-based nonpartisan philanthropy.

"We are seeing the erosion of employment-based coverage, which is the way we've relied on to get health coverage," said E. Richard Brown, director of the UCLA Center for Health Policy Research.

The potential solution offered in Proposition 72 was devised by healthcare experts and pushed through the Legislature last year by Senate President Pro Tem John Burton (D-San Francisco) as Senate Bill 2.

The law would require all businesses with 50 or more employees to cover their workers and pick up 80% of the premium or pay into a state fund that would provide insurance.

Companies with 200 or more employees would be required to provide coverage to employees and dependents, starting in January 2006.

Firms with at least 50 workers but fewer than 200 would have to provide coverage to employees only, starting in January 2007.

The rules would apply to any employee who works at least 100 hours a month and has been on the payroll for three months.

Companies with between 20 and 49 workers would have to provide coverage only if the state created a tax credit to reimburse employers for a fifth of the cost, which the Legislature has not done.

Companies with fewer than 20 employees would not have to provide insurance at all. Those small companies, which together employ two-thirds of California's uninsured workers, are the least likely to offer coverage now.


Excerpt from the Los Angeles Times. To read entire article click here