Wilson Signs Health Insurance Reforms

SACRAMENTO —  Seeking to make health care available to employees of small businesses, Gov. Pete Wilson on Tuesday signed legislation that changes insurance practices that have forced many employers to drop health coverage.

By pooling insurance premiums and putting caps on rates, the measure by Assemblyman Burt Margolin (D-Los Angeles) could extend health benefits to 100,000 uninsured California workers, according to an Assembly analysis.

“The bill guarantees that any small business that applies for health insurance will be accepted by all insurers who operate in the small group market,” Wilson said.

The statute specifically bars certain practices that have forced many businesses to drop coverage for their workers. Before the legislation, for example, insurers were free to hike rates or drop policies for small businesses when a covered employee suddenly had sizable medical expenses.

The insurance companies could also exclude or limit coverage for “high risk” workers.

These and other practices have had the effect of pricing many small employers out of the health insurance market.

The new statute will also allow insured employees to change jobs within the state without losing their health insurance or having to wait for coverage of a medical problem that existed before the job change.

The bill, which goes into effect next July, will eventually apply to all businesses with three to 50 employees.

But Margolin stressed that the measure also is intended to help preserve coverage for the more than 4 million workers and dependents who receive health benefits from small business employers.

Small businesses, he said, have had to “live in fear of the moment one of their employees gets sick. . . . The employees live with the fear that someone in their family will have a problem and their coverage will vanish.”

Consumers Union and Health Access, two groups seeking even more sweeping changes in health coverage, generally approved of the Margolin bill, describing it as a “very modest reform.” But the groups also pointed out that some employers could drop coverage because the bill does provide for rate increases for some small businesses.

Margolin acknowledged that his bill is only one step in providing coverage to an estimated 6 million uninsured Californians--most of whom have too much income to qualify for government help but are not covered through employment.

Proposition 166, an initiative backed by the California Medical Assn., would eventually require all businesses in the state to provide basic health care coverage. But critics have charged that the November ballot measure is flawed because it contains inadequate cost controls and the added expense could force some smaller employers out of business.

State Insurance Commissioner John Garamendi has proposed revamping the current system of private and government health coverage to provide insurance for all Californians. A bill that would establish a commission to devise such a plan passed the Legislature and is awaiting Wilson’s signature or veto.

Wilson on Tuesday did sign a series of other health care measures affecting insurance coverage.

One bill, by Sen. Mike Thompson (D-St. Helena), requires insurers to expand coverage for children to include preventive care, including physical exams, immunizations and lab services.

A pair of measures, by Assemblyman William J. Filante (R-Greenbrae) and Sen. Art Torres (D-Los Angeles), requires health insurers and others to use a uniform billing form with standard codes for illnesses and treatments. The legislation is intended to cut costs by eliminating confusing paperwork.

Wilson also signed a bill by Sen. Henry J. Mello (D-Santa Cruz) which sets standards for insurance policies that cover long-term care for the elderly. Garamendi said that the legislation will help put an end to high-pressure sales of policies that do not provide adequate coverage.