Governor Davis To Sign $11.4 Billion Health Insurance Mandate Over Weekend

  • Publication Date: October 2003

  • Topics: Health Care

Washington – Governor Gray Davis is expected to sign a controversial health insurance bill this weekend that would cost California businesses $11.4 billion a year. The enormous cost and consequences of Senate Bill 2 are analyzed in a report conducted by Dr. Aaron Yelowitz, a nationally respected labor and health economist at the University of Kentucky and a research fellow at the National Bureau of Economic Research. Prior to the University of Kentucky, Yelowitz spent seven years as an economist at UCLA.

Yelowitz’s report, commissioned by The Employment Policies Institute (EPI), found the following:

  • California employees will suffer from the $11.4 billion cost as employers adjust for the mandate by lowering wages, cutting benefits, or by laying off workers.
  • Over a half-million employees who currently earn the state minimum wage or just above it will be hit the hardest. These employees are at risk of losing their jobs either through labor force cuts or displacement by more experienced employees, who employers will hire to offset increased labor costs.
  • Despite the $11.4 billion cost of the bill, 4.4 million Californians, 65% of the uninsured will remain uninsured.

Last week a Dallas restaurant group announced that it was backing away from its planned purchase of Chevy’s, a chain of restaurants with 58 outlets in California, citing the cost of Senate Bill 2 and other increases in labor costs.

“California’s income growth is already lower and the unemployment rate is higher than the national average,” said Craig Garthwaite, an EPI economist. “When Governor Davis signs Senate Bill 2, the enormous cost to business and the massive job loss will make California an even less attractive place for business and economic growth. In the end, millions of Californians will remain uninsured. California cannot afford this type of irresponsible policy.”