(Excerpt)By Joel B. Finkelstein, AMNews staff. Oct. 25, 2004. Washington -- A California law that would require some employers to offer health insurance is facing a new challenge before it even goes into effect. The employer mandate was signed into law in the waning days of Gov. Gray Davis' administration last year. It would require medium and large companies to provide a minimum standard of health coverage to employees or pay into a government-run program.

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Failing to defeat the measure's passage through the Legislature, opponents spent $2.5 million garnering signatures to get a referendum on the November ballot. California voters now have a chance to reaffirm the law or veto it.

The law still might require some fine-tuning, but it keeps the issue of the uninsured on the table, said Jack Lewin, MD, executive vice president of the California Medical Assn., which supports the measure and is part of a coalition fighting for its reaffirmation.

According to estimates, the law would extend coverage to fewer than a million of the 4.5 million uninsured people in California.

The law, which would be phased in over several years, first mandates coverage among companies with 200 and more employees beginning in 2006 and companies with 50 to 199 employees in 2007. Ninety-nine percent of the former and 94% of the latter already offer their workers health benefits, according to a 2002 survey.

Employer groups complain that the law is poorly written and amounts to a new $7 billion tax on companies and their workers.

Why risk imposing such a burden on companies when so few people are expected to gain from it, asked James Knight, MD, immediate past president of the San Diego Medical Society. He petitioned the CMA to reverse its position on the legislation before it was passed.

"We all recognize the problem of the uninsured, but it's not because companies have all of a sudden become stingy; it's because of the rising costs of premiums," he said.

He added that the law does nothing to address that problem. The law will only serve to convert "the working uninsured into the unemployed."

Opponents also argue that businesses, mainly the smaller ones, won't want to deal with administering health benefits and will choose to pay into the state-run program.

Dr. Knight fears that the government-based coverage will end up reimbursing doctors as poorly as Medicaid does now, which is often below costs.

Dr. Lewin disagrees with the opponents' assessment. The law will preserve a minimum standard of coverage during a time when more and more companies are contemplating dropping their health benefits, he said. "It would have a powerful stop-loss effect."

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Source: AMEDNEWS.com