When Gov. Arnold Schwarzenegger announced his ambitious universal health care plan last week, the underlying premise was clear: Businesses that already provide their workers insurance should be better off.
The plan forces companies that do not provide insurance to pay into a state pool, requires doctors and hospitals to pay a fee based on their revenues, and mandates that individuals carry insurance. As such, it is supposed to lift the burden from employers who believe their insurance premiums are inflated by freeloaders who don't now participate in the system.
Don't be so sure.
Some analysts and business groups say not enough is known about how the proposal's economics will play out to say whether it will lead to lower costs over time for employers.
"There are still a lot of questions about how the plan will impact businesses," said Richard Brown, director of the UCLA Center for Health Policy Research.
Among the big issues worrying the California Manufacturing and Technology, a trade group representing big manufacturers, is whether there are enough controls to prevent costs from spiraling as the state's 6.5 million uninsured are brought into the system.
"To the extent that overall health care costs for businesses are reduced that will be a good start for California manufacturers, since we provide coverage for our employees at a higher level than any industry in the state," said Gino DiCaro, a spokesman for the association. "We're just concerned that the cost containment measures the governor is promising will actually be in the (approved) plan."
The plan's chief cost controls include a mandate that insurers spend at least 85 percent of their premium revenues on health care. It also streamlines insurers' reporting requirements and allows for electronic submission of insurance documents.
In addition, the governor's plan banks on bringing more funding into the state by lowering the number of uninsured residents and thereby drawing down more than $1 billion in additional federal Medicaid dollars. Another big source of funds $3.5 billion would be the 2 percent fee placed on a doctor's gross revenues and the 4 percent on a hospital's gross.
But some worry that the proposal will actually entice some employers to drop coverage, and instead make a less costly contribution to a pool intended to subsidize insurance costs for employees who are not offered coverage at work. That fee is proposed at 4 percent of total payroll.
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