California’s legislature is moving forward on two “play or pay” bills that would require employers that do not offer cafeteria health plans to their workers to pay into a state-run health plan purchasing pool.
The bills, which also require insurers to guarantee the issuance of policies to individuals, would require California employers to spend at least 7.5% of their payrolls on employee health insurance.
In the California State Assembly, A.B. 8 was approved by a vote of 47-32, while the State Senate backed S.B. 48 by a 23-16 margin. Both measures passed with near unanimous Democratic support and with strong support from the Democratic state. Assembly Speaker Fabian Núñez sponsored the Assembly measure and Senate President pro tempore Don Perata sponsored the Senate bill.
Legislative leaders hope to reconcile both bills into a single measure to send to Gov. Arnold Schwarzenegger.
After the Senate passed his bill, Perata stated that both he and Núñez “fully intend to work in tandem” to create a single omnibus reform bill to send to the governor.
Final note: Other states have tried a similar approach, only to be shot down in court. For example, Maryland’s payroll tax bill, which would have affected only its largest private employer, Wal-Mart, was struck down because it violated the federal Employee Retirement Income Security Act (ERISA) by requiring multistate employers to adopt different health care plans for operations in multiple states. The court said ERISA pre-empted the state law.