Press Coverage

Health Care Security Act in the News

"Businesses warm to 'pay or play' healthcare"

California and New York City ponder making some employers pay for
insurance - or help government do it.
By Alexandra Marks | Staff writer of The Christian Science Monitor
from the September 29, 2004 edition (Read the story online)

NEW YORK - In a new sign of the business community's increasing frustration with the nation's healthcare system, "Pay or Play" is gaining popularity with the wingtipped set.

That's the nickname of a controversial proposal that requires businesses to provide workers health insurance, or pay into a government fund that will do it for them.

The business community once saw it as an ideologically offensive unfunded mandate. But as initiatives in New York, California, and Washington State show, an increasing number of traditional employers have come to view it as a protection of their own interests, or even as the foundation for reform of the healthcare system.

Faced with skyrocketing insurance premiums and tough competition from other businesses that don't provide health insurance, many medium and large employers have signed onto to pay-or-play proposals - like the one introduced at the New York City Council yesterday.

Called the New York City Health Care Security Act, it would require all employers in the hotel, large grocery, building services, industrial laundry, and construction industries either to provide family health insurance or to contribute to a fund that would do it for them.

More than 70 percent of the affected businesses already provide employees with affordable insurance. That's been key to winning support for the proposal from more than 90 local businesses, including one of the city's major supermarket chains.

"The business support for this New York campaign really shows reaction by responsible employers to the spreading Wal-Mart model of low wages and few benefits," says Paul Sonn, associate counsel at the Brennan Center for Justice at New York University School of Law.

This fall, the people of California will be asked to vote on a referendum for a similar proposal that was passed with some business support by the Legislature and signed into law last year by then-Gov. Gray Davis. That bill would not only require businesses with more than 50 employees to provide health insurance or pay into a state fund, but it would also create a subsidy to help low-income employees pay their share of insurance premiums.

But opponents, largely funded by Wal-Mart and McDonald's, gathered enough signatures to put the referendum on the ballot, which asks voters to rescind the law before it takes effect in January 2006. Supporters believe the proposal will pass intact, in part because polls show a majority of voters support it. But opponents have been heartened by Gov. Arnold Schwarzenegger's announcement that he recommends voting against it.

If the proposal passes, more than a million of California's uninsured workers will get coverage. Opponents contend it will cost the state more than $7 billion. Supporters counter that the overall savings garnered from covering the uninsured will end up saving the state $620 million to $900 million per year.

The New York proposal would protect the coverage of 152,000 workers and extend it to 60,000 currently uninsured employees. Supporters, like John Catsimatidis, CEO of Gristedes supermarkets, argue that mandating coverage is an important way to protect quality jobs and employers. "In New York supermarkets, being a butcher or a store manager is way of life - a family-sustaining job," he said in a statement. "But if my competitors are allowed to be irresponsible employers, not providing health and other benefits - they're not only hurting their employees, they're hurting mine."

Opponents say the increased costs could drive some businesses under and raise prices for consumers. They also believe government does not have a right to tell them how to run their businesses.

New York City Councilwoman Christine Quinn, who introduced the legislation, says she hopes to convince opponents that pay-or-play is actually pro-business. "We have introduced this bill at the request of businesses, the 70 percent of folks who are out there and doing the right thing by providing insurance," she says. "We have an obligation to protect that majority, not the minority that don't offer the appropriate benefits that we believe they should."

Health bill could boost coverage

If passed, act would require employers to provide insurance or pay into city fund By Samantha Marshall, September 27, 2004 CRAIN COMMUNICATIONS (read the story online.)

Thousands of workers in New York would be guaranteed health insurance coverage by their employers if a bill being introduced today in the City Council passes.

The New York City Health Care Security Act would require all employers in certain sectors either to directly provide their employees with health insurance, or to contribute to a citywide fund that would offer workers and their families coverage. The law would be applied to hotels, large grocery chains, building services firms, industrial laundries and the construction industry.

About 13,000 businesses would be affected by the new legislation, according to the bill's advocates. About 70% of the employers in these fields, or 9,300, already offer adequate health coverage to 152,000 workers.

Proponents estimate that another 60,000 uninsured workers would receive coverage if the bill is approved.


"This is a strong step in an area that is long overdue," says Gordon Roth, owner of Manhattan-based Roth Painting Co., a family-owned business with about 30 workers on its payroll.

The legislation, however, is likely to face fierce opposition from many business groups, which are against any form of mandated health coverage.


"The cost of doing business in New York is already significantly higher than in most other areas," says Don Winter, chairman of the Manhattan Chamber of Commerce. "The ramifications of this and any other well-intentioned legislation may have the adverse effect of actually creating a freeze on hiring and contributing to higher unemployment."

Proponents of the bill, which does have the backing of 80-plus local, mainly unionized businesses, say the goal is to reduce the so-called Wal-Mart factor by leveling the competitive playing field in sectors where some companies have dropped or reduced coverage to cut costs. John Catsimatidis, chief executive of the Gristede's supermarket chain, is a major supporter of the measure.

Under the terms of the act, employers could either continue to offer their industry's prevailing level of health care or make a contribution to the fund based on the hours worked in the city by their uninsured workers. The amount would be based on the pro-rated annual cost of purchasing adequate family health coverage for an uninsured worker.

Last year, California enacted a similar law that will be phased in to eventually cover businesses with 50 or more workers. The law, known as Pay or Play, came about because of the effect Wal-Mart's cost-cutting was having on benefits for workers at competing companies, although business groups in that state are trying to get the measure overturned.

Legal right

Councilwoman Christine Quinn, D-Manhattan, who is introducing the bill, believes the city has the power to enact the legislation because New York state's home rule law gives the city the authority to regulate local businesses in order to protect the health and safety of workers and residents. State law also permits the city to assess fees on local businesses to finance the cost of regulatory programs for their industries.

Those in favor of the new legislation say it's unlikely to drive businesses and jobs out of the city because it covers industries that provide essential services to New Yorkers. They also argue that the law would save taxpayers the millions of dollars it costs each year to pay for social programs and emergency room care for uninsured workers.

"We pay twice, for our own people and indirectly through taxes, says business owner Mr. Roth.

Read the article online.

Watch the Regional News Network's coverage of the Health Care Security Act here

Health Care Security Act