CalChamber Opposes Proposal Increasing Health Care Costs

A California Chamber of Commerce-opposed bill that will increase health care costs for employers and employees is set to be considered by the Assembly Health Committee on July 13.

The proposal, SB 568 (Pan; D- Sacramento), prohibits a deductible requirement for a covered prescription drug as well as certain equipment and supplies, and would limit the amount paid for the benefit to no more than the amount of copayment or coinsurance specified in the applicable summary of benefits and coverage.

This mandate will result in a large increase in health care premiums for employers, who have suffered staggering financial setbacks as a result of the COVID-19 pandemic and are trying to rebuild. Employees also will face higher health care premium costs due to the mandate.

When health plans and insurers are required to cover new services or to waive/limit cost-sharing requirements for certain services, premiums for all enrollees and purchasers go up. This is true even though only some enrollees will utilize the mandated product or services, or benefit from the reduction in cost-sharing.

If the SB 568 mandate goes into effect, employer health care premiums would increase by more than $126.3 million, according to an analysis by the California Health Benefits Review Program (CHBRP). Premiums for individual health plans would increase more than $86.5 million, while employee premiums also would increase more than $49.4 million, according to CHBRP estimates.

When considering SB 568, state lawmakers must remember the numerous benefit mandate bills introduced this year that could increase premiums for employers and enrollees.

According to the California Health Care Foundation, 18 million of 32.7 million insured Californians had health care coverage through an employer-sponsored health plan in 2019. The average premium for family coverage has increased 22% over the last five years and 55% over the last 10 years. Since 2002, premiums for the average family health plan in the employer market have increased 133%.

For job-based coverage, the 2020 Kaiser Family Foundation Employer Health Benefits Survey reported that the average annual premium for single coverage rose 4%, to $7,470. The average annual premium for family coverage also rose 4%, to $21,342, which is nearly one-third of the state’s median family income.

The CalChamber is urging legislators not to increase costs of health care coverage for employers and employees with another mandate.

Staff Contact: Preston Young

Preston Young
Preston R. Young joined the CalChamber in October 2019 as a policy advocate specializing in health care policy and taxation issues. Young came to CalChamber from Schuering Zimmerman & Doyle, LLP, where he specialized in medical malpractice, health care, product liability and elder abuse litigation. Young holds a B.A. in communications from Saint Mary’s College of California, and earned a J.D. from Golden Gate University School of Law, where he was associate editor of the Environmental Law Journal. See full bio.