SB1431 Small Business Self Insurance/ SB1099 Regulations

On Monday I testified along with the National Federation before committee on SB1431[ Wright]. Small Business California was a cosponsor of this bill along with other business organizations including the National Federation of Business who also sponsored the legislation. This is simple bill that requires the state to put on the website regulations that have been put into effect.

Currently there is no central place for a businesses to find out new California regulations. Last year over 400 regulations were put in place. Testifying against the bill was labor and the Sierra Club. The bill passed unanimously.

SB 1431 has been introduced by Assemblyman De Leon at the request of the Insurance Commissioner. This bill would raise the attachment point for small businesses in setting up self insurance. The attachment point is basically the amount a small business would have to pay before an insurance company steps in.

The current attachment point is $20000 and the bill would raise this to $95000.

Small Business California was quoted in the LA Times Saturday as saying we had no position. Most business organizations in the state oppose this. I have been questioned about our position

Basically we are supportive of any measure that reduces the cost of health insurance for their employees. This bill clearly would discourage many small businesses from self insuring because of the $95000 attachment point.

That said the Insurance Commissioner and the author argue that healthier small business groups currently can self insure and the insured businesses pay higher premiums because of adverse selection. Quite frankly I find this argument weak but what I see as significant is that self insured companies do not have to provide the same benefits as insured businesses. For example they would not have to provide maternity coverage and autism. It therefore is not a level playing field.
A very tough issue which I can understand both sides. What do you think?