2003 California Establishment Survey

Preliminary Results on Employer Based Healthcare Reform

Initial results from the California Establishment Survey (CES) suggest that 64% of business respondents support a healthcare reform that requires that employers either provide health insurance, or pay a fee into a state fund to cover the uninsured. 59% of business respondents who currently do not offer health insurance to workers also support such a healthcare reform.

We find that 90% of firms that currently do not offer health benefits are in markets where their competitors do not provide such benefits either. This suggests that businesses most impacted by the proposed reform would be unlikely to face idiosyncratic increases in costs that would worsen their competitive position. We have also used the CES data to estimate the increases in costs that various businesses will face from the implementation of Senate Bill 2 (SB2). The median covered California business (i.e., with 20 or more employees) will see an annual increase in costs of $1,343 per worker it newly insures. This represents a 0.2% increase in overall operating costs. 23% of covered businesses would see a rise in operating costs of more than 1%. 0.1% of covered businesses, or 0.01% of all California businesses, will see a rise in operating costs of no greater than 4%.