Health Care Tax Doesn’t Add Up

(May 30, 2013) CalChamber today released the latest edition of CalChamber News, a video series focusing on issues important to job creation and economic recovery in California. This edition features a job killer bill, AB 880 (Gomez; Los Angeles), that would require the state’s largest employers to pay a penalty for each worker who opts to enroll in the state’s MediCal program. The bill impacts a wide range of industries, including large non profits, all of which would be hit hard with new significant financial penalties related to health care coverage for their workforce.

AB 880 is currently on the Assembly Floor awaiting a vote this week. CalChamber and a large coalition of businesses and non-profits have argued that this “ job killer” bill will cause significant collateral damage to the recovering economy and result in fewer new jobs.

“The math just doesn’t add up,” says CalChamber President and CEO Allan Zaremberg. “When you drive up costs you hire fewer people. I don’t think there is any question that this is a job killer,” he said.

In the video, Zaremberg explains that AB 880 imposes a new tax on California employers when they hire part time employees, it shifts the burden of paying for a MediCal program in California from the public sector, from the state, over to the private sector, and eliminates any reason to do efficiencies in the program.

AB 880 requires large employers to pay a penalty anywhere from $6,000 to $15,000 for each worker who opts to enroll in the state’s MediCal program. Employers will still have to pay the penalty even if they offer their own coverage and it also extends to part time and seasonal workers, even those working as little as eight hours per week.

This “job killer” spells doom for nonprofits like the California Community College Foundation which employs hundreds of part time tutors to work with disadvantaged youth.

“This bill would actually be devastating to our organization,” says Rick Fowler president and CEO of the Community College Foundation. ” I do not see how we could continue to be inexistence. It would put us out of business.”

In the video, Fowler explains that what California needs most is a health private sector economy and this bill is a “body blow” against that.

CalChamber warns that AB 880 will also increase frivolous litigation and limit the ability of businesses to manage their own workforce. Employers are prohibited from asking about a worker’s family income or enrollment in MediCal.

The concern is not just more uncertainty in the face of implementing the Affordable Care Act, but the inability for entry level, unskilled workers, students and older workers to find jobs.