07/12/2007
California's Senate Health Committee approved a bill Wednesday that, according to a survey recently released by NFIB, will result in the loss of 249,000 jobs and cost the state's small businesses billions of dollars. Since California frequently sets trends for the rest of the country, this legislation is a step down a slippery slope that could lead to other states passing similar legislation, ultimately hurting all small businesses.
"Our members will be slammed hard," said John Kabateck, executive director of NFIB/California. "The Legislature needs to understand what damage it could do to the engine of the California economy. When small firms get hit with cost increases, they cannot automatically increase prices to make up the difference."
California Assembly Bill 8, which was approved with a 7-4 vote, requires the state's small businesses pay a 7.5 percent payroll tax if they don't offer health insurance, and those that do offer insurance but spend less than 7.5 percent of their payroll on the program(s) must pay the difference. The impact of this bill will be devastating to small-business owners, as they will be forced to lay off workers to comply with the bill and compensate for their share of the estimated $67 billion in lost sales.
Results from this year's NFIB/California Member Ballot show that nearly 70 percent of members polled are opposed to mandatory requirements for individuals, and the Kaiser Family Foundation found that while 99 percent of large corporations provided health care to their workers, less than half of small businesses can afford to do so. Mandates like A.B. 8 are disproportionately burdensome to small-business owners, and forcing them to offer what they can't afford will only result in lost jobs or lowered wages.
California's Senate Appropriations Committee must approve A.B. 8 before the full state Senate can consider it, and the bill also will need approval from the state Assembly to become law. We will continue to fight A.B. 8, as it contains no cost containment nor control measures and no small-business exemptions, and it provides no assistance with the cost of health-insurance premiums for small employers.
