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# Health care propositionsspelltrouble for businesses
- URL: https://www.smdp.com/health-care-propositionsspelltrouble-for-businesses/
- Published: 2004-10-05T15:00:00.000Z
- Updated: 2026-10-25T01:04:40.000Z
- Author: David Pisarra
- Tags: Opinion, Santa Monica, #archive-import

*WHAT’S THE POINT?*

There are 28 days until the election, and this year there are two major new taxes on the ballot for businesses.

They don’t look like taxes at all. They are cloaked, as usual, in language that looks like “better health care.” Health care being the hot button issue that it is, most people will likely want to vote in favor of these two propositions.

Proposition 67 is the emergency medical services proposition. What this bill does is provide funding for the state mandated emergency care that doctors and emergency rooms provide to those who do not have insurance, or the funds to pay for their emergency health care.

The goal of the proposition is to put an additional tax on our phone bills. It is called a surcharge, and it is only applicable to intra-state calls. Your long distance calls are not effected by this legislation. If passed there will be a 3 percent surcharge on your residential phone bill, up to a maximum of 50 cents. There are provisions whereby those who are on a reduced fee service agreement will be eligible to avoid this surcharge.

The hidden costs in this bill, like much legislation, is what it doesn’t say. It does-n’t put a limit on cellular calls, and there are no provisions in this bill for a maximum surcharge on business lines. That means that your cell phone bill will be increased 3 percent and if you have a business, you have just been taxed an additional 3 percent on your intra-state phone calls, with no maximum limit.

The purpose of the bill is to provide compensation to doctors and hospitals who have a state-mandated duty to provide services and care to the indigent. Any treating hospital or physician must provide emergency care to everyone who comes through the door of an ER. Hundreds of millions of dollars of care is provided this way each year to people who cannot afford health insurance. The problem is that the doctors and hospitals have a legal obligation to provide care to those who cannot afford it. In essence, this is a form of forced employment, which used to be called slavery, but there is a 13th amendment to the United States Constitution that forbids slavery.

When a government legislates something to be done, but doesn’t pay for it, that is called an un-funded mandate, and Proposition 67 seeks to fund the emergency care mandate through this surcharge. This is not a bad deal for residential customers.

It is not all that bad a deal for businesses, and it is great for doctors and hospitals. Hopefully this type of proposition would not only pay doctors and hospitals for the services they provide, but maybe would help stem the tide of hospital closures throughout the state. And potentially, it could make it economically feasible for some medical groups to open new hospitals or re-open closed ones.

The deadlier of the two propositions on the ballot for businesses is Proposition 72\. This proposition is a nightmare cloaked in a happy childhood dream world.

In theory, what it does is provide statewide health insurance by forcing employers to either pay or play.

In 2003, Senate Bill 2 was passed, and signed by the governor. That bill required all employers over a certain size to provide health insurance for their employees or pay a state fee, and the government would then provide health insurance.

That bill is on hold pending the results of this year’s Proposition 72\. A “yes” vote for this proposition means that SB2 as enacted and enrolled, will be enforced. A “no” vote would repeal it.

This proposition plays on the heartstrings of all who believe in universal health care. It sounds wonderful. Mini employers, those under 19 employees, do not have to comply; small employers (20–49 employees) have to provide employee coverage if a specified tax credit is passed; medium-size employers (50- 199 employees) have to provide employee health care; and large employers (200 or more employees) have to provide employee and dependent care.

The program would be administered by the managed risk medical insurance board and the employment development department, so at least it is not creating a new government body. However, it is the government getting involved in the quagmire of health care and that can never be good.

In reality this is probably not going to effect the large corporations who have more than 200 employees because most already have a health plan in place. Where it gets dicey is for the small-and medium-sized companies. This is the sort of hidden costs of doing business in California that will make someone think twice about opening up a shop here.

When going from a 19-person firm to a 20-person firm, it means that an owner now has to provide health insurance, if they haven’t been. It means that the 20th employee has a huge effective cost to the company. That one employee is changing the economics of the bottom line.

In companies that have many minimum wage employees, such as a fast food outlet, or a small manufacturer, this can be a huge cost.

Granted, it is really just a shifting of costs, because either the money comes from employers in the form of insurance premiums, or it will come in the form of some other tax because eventually the unfunded mandate must be funded or the hospitals will all close, and the doctors will go into private practice where they can get paid.

The big concern I have with this proposition is it seems extremely similar to the worker’s compensation system. A system that I feel no guilt in saying is the most corrupt, backwards, inept, and anti-business system ever devised short of communism, and it is a gross failure in providing workers with quality care, or employers with rehabilitated employees.

I like the thought behind the two propositions. I just think they need to be more carefully crafted, otherwise all we’ve done is tax talking, and created another worker’s compensation nightmare for business. (David Pisarra is a business development lawyer in the Santa Monica firm of Pisarra & Grist. He welcomes your questions and comments. He or (310)664-9969).

*Originally published in the Santa Monica Daily Press print edition on October 5, 2004.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/100504.pdf?ref=smdp.com)