California's business community has a golden opportunity to influence health care reform in our Golden State. As the owner of a decade-old independent business, I believe meaningful reform must include shared responsibility, protect small business and address the skyrocketing costs of health care delivery. This is no small task, and businesses will need to play their part in order to implement long-lasting reform that will benefit all Californians.
There is no doubt that business has a vested interest in meaningful health care reform. Nationally, businesses spend a stunning $500 billion a year or 4 percent of the GDP on health-care benefits. In California, Medical care has become the state's largest single economic activity, approaching $200 billion a year, or more than 10 percent of the state's total economy. As the most populous county in the state, Los Angeles businesses spend significantly on health care for their employees. Yet, we continue to compete aggressively for the talent needed to sustain our vibrant economy.
Los Angeles is widely heralded as a business, trade and cultural mecca. It enjoys its status as the largest manufacturing center in the West, the nation's busiest port, a major financial and banking center, and the largest retail market in the United States. If we are to sustain this status, Los Angeles must attract and retain its share of human talent. Expanding access to affordable quality health care is critical towards reaching this goal.
In August, nearly 3,500 Californians assembled in Hollywood for a non-partisan statewide conversation on health care reform. This unprecedented gathering was headlined by Gov. Arnold Schwarzenegger, Senate President Pro Tem Don Perata, Assembly Speaker Fabian N & #250; & #324;ez, and Assembly Republican leader Mike Villines. This gathering, attended by a diverse group of stakeholders, underscores the need for reform with 82 percent stating the current system requires major change, and 86 percent saying it's essential for reform to pass this year. Even more telling is the 84 percent who said they would be at least somewhat willing to share responsibility for paying for reform.
Schwarzenegger's health care reform proposal is based on the principals of shared financing responsibility, the protection of small business and reducing the costs of health care. I encourage Los Angeles business owners to consider this proposal, and I commend the Los Angeles Area Chamber of Commerce for being one of the first business organizations in our state to endorse his proposal as the best template for reform.
The notion of shared responsibility should be attractive for employers as the paternalistic burden of providing health care does not squarely fall on their shoulders. Instead, the need for financing the proposed $12 billion estimated cost for this new system would be the responsibility among all stakeholders including government, health plans, health care organizations, pharmaceutical companies, providers, employers, employees and other individuals.
Among its more controversial components, the governor's plan includes a 4 percent payroll fee imposed on employers with 10 or more employees who do not already contribute at least that much to providing health insurance for their employees. While some businesses will be inclined to oppose any payroll fee, the alternative proposed by the Legislature includes a 7 percent mandate.
The governor's plan protects small business by providing an exemption to those businesses with fewer than 10 workers. This should be welcome relief for the Los Angeles business community, where nearly half of the local workforce is dependent on small enterprises for employment. Again, the legislative alternative does not contain this provision and would leave many small businesses in our communities with excessive health care burdens.
Finally, the governor's plan addresses the skyrocketing costs of health care through investments in preventative care and incentives to participate in healthy and fit lifestyles. These investments will both directly and indirectly benefit the business community. It is widely documented that workplace wellness initiatives lead to an increase in productivity, loss of absenteeism and a reduction in stress-related illnesses. Investments in preventive care will also help to bring down the total costs of health care in our state.
Today's fast-moving marketplace coupled with a multitude of choices often gives rise to uncertainty and inaction. Instead, the business community needs to become actively engaged in the health care dialogue. With so much at stake, I hope Los Angeles businesses will examine the alternatives and join the growing number of businesses and business organizations that support Schwarzenegger's proposal. As business owners, let's take this golden opportunity and provide meaningful health care reform for our Golden State.
Brandon F. Shamim is president of Beacon Management Group in Pasadena and an executive member of the Los Angeles Area Chamber of Commerce board.
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