Proposition 72 Myths

“Yes on 72” Campaign Distorting Costs of Job-Killing Health Care Mandate
  • Publication Date: October 2004

  • Topics: Health Care

Sacramento –The “Yes on 72” campaign is weaving a web of deceit for voters on the true cost of Proposition 72—a high priced health care mandate on businesses that will result in enormous job loss while still leaving the majority of California’s uninsured without coverage. Supporters of Prop 72 are resorting to blatant misrepresentation of economic reality, including:

MYTH: “Proposition 72 will save California’s taxpayers money”– “Yes on 72” spokesman Dr. Richard Corlin wrongly suggested that an Employment Policies Institute (EPI) study on the effects of Prop 72 finds that it will save taxpayers between $1.4 billion and $1.7 billion by transferring individuals from Medicaid to employer provided insurance. In reality, the EPI study found that Prop. 72 will require businesses to pay up to $1.7 billion to provide health coverage to employees who already receive government insurance. California will lose hundreds of millions of dollars in health care support from Washington, DC because the state only pays a portion of the cost of Medi-Cal (the federal government pays 50 percent). Additionally, this $1.7 billion figure includes Medicare and Champus/Tricare—programs which are currently funded 100% by the federal government that would have their cost burden shifted to California businesses if Prop 72 passes.

MYTH: “Proposition 72 will only cost $1.3 billion” — This California Medical Association (CMA) estimate of the cost of Prop 72 assumes that the bill only covers the uninsured. As Dr. Corlin’s own statement reveals, CMA knows that this initiative would target people who already receive health coverage, yet they ignore the other affected groups in order to decrease their cost estimate. In reality, independent academic research reveals that Prop 72 will cost California businesses $12.9 billion a year. In addition, only 40% of this spending goes to the uninsured with the remaining going to individuals who already have insurance.

MYTH: “Proposition 72 will not cost California jobs” — While supporters claim that Prop 72 will not decrease employment in California, the vast majority of economic research says that it will. An EPI study predicts Prop 72 will cost up to 151,000 jobs—nearly twice the number of jobs California has created since January. Most of the displaced employees will tend to be younger, poorer, less educated and disproportionately minorities.

MYTH: 64 percent of businesses support Prop 72 — Supporters of Prop 72 claim that the majority of “business respondents” in a survey support the initiative. However, one look at this survey reveals that 91 percent of these “business respondents” are not the business owners but rather business employees.

“It is unfortunate that the Yes on 72 campaign has resorted to misrepresentations to sell voters an extremely poor initiative to insure the uninsured,” said EPI Executive Director Richard Berman. “The staggering price tag of Prop 72 will lead to tremendous job loss to California’s least-skilled workers while an overwhelming number of uninsured will remain without coverage.”

The Employment Policies Institute is a nonprofit research organization dedicated to studying public policy issues surrounding entry-level employment.