California businesses pay a $14.7 billion hidden tax each year.

• Every business that offers health coverage to employees pays a hidden tax in the form of higher premiums to subsidize health care for those who can’t, or won’t get health insurance.
• Employer coverage equaled $86.2 billion in 2006—that’s 42.7 percent of all health care expenditures for California residents, according to a June 2006 report by the Lewin Group.
• Insured individuals and employers offering coverage pay approximately 17 percent higher premiums to offset the uninsured and the effects of Medi-Cal under-funding.
• The uninsured are responsible for approximately 10 percent of this total; Medi-Cal under-funding accounts for the remaining 7 percent.
• Individuals and families pay a hidden tax too. The New America Foundation found that the hidden tax on health care premiums equals $455/individual and $1,186/family annually.

California’s health care premiums outpace national increases and the state’s inflation rate.  

• In 2006, California’s premiums increased by 8.7 percent. Nationally, premiums increased by 7.7 percent. California’s premium increases dramatically outpaced the state’s inflation rate of 4.2 percent.

• The state has weathered dramatic increases in the past decade, coping with jumps as high as 15.8 percent in a single year. According to the California Health Care Foundation, the state’s premiums increased by 6.7 percent (2000); 10.0 percent (2001); 13.4 percent (2002); 15.8 percent (2003); 11.4 percent (2004); 8.2 percent (2005); 8.7 percent (2006).

Golden State businesses pay more than other states. Small businesses and their employees are hurting the most.

• California employers contribute more for individuals here than elsewhere in the United States—$4,003 annually for single coverage, versus $3,615 by employers nationally.
• Small employers suffer from higher premium increases. According to the California Health Care Foundation, premium increases were greater for small employers than for large employers: small firms (3 to 199 workers) experienced average premium increases of 10.9 percent, compared with 7.3 percent for large firms (200 or more workers).
• Small California businesses are 24 percent more likely to pay the full premium for individuals than large firms.  

High premiums mean fewer working Californians have health coverage.

• The percentage of uninsured Americans has grown from 13 percent in 1987 to 18 percent in 2003 according to a 2005 study by RAND. This increase impacted both full and part-time workers.
• California employers who don’t offer health insurance blame this, most frequently, on high premiums, according to the California Health Care foundation.

The Governor’s health care reform will reduce the hidden tax on businesses by asking every player to do their part.   

• All Californians—individuals, insurers, doctors, hospitals and federal and state government—have a shared responsibility to fix our broken health care system.
• Under the Governor’s proposal, businesses with 10 or more employees who choose not to offer health coverage will contribute 4 percent of payroll toward the cost of employees’ health coverage. Companies with fewer than 10 employees—a full 80 percent of businesses in California—are exempt.
• The 4 percent fee will prevent employers of 10 or more from dropping their health care coverage in light of the state’s program.
• These fees will help provide every Californian with health care coverage, ending the systematic and costly abuse of emergency care, lowering hospital costs, and driving down premiums as a result. 
• Employers will be able to avoid the fee by offering health coverage to their employees. And they’ll benefit from a healthier workforce.