“Pay or Play” Law in California

One of the biggest problems faced by states like California is how to provide health insurance coverage options for individuals who work for smaller business with no legal obligation to sponsor group health insurance for their employees.

One possible way the state of California is trying to deal with this complex issue is by introducing a law, (known as “Pay or Play”) that would, over the next few years, lower the threshold for the number of employees a firm can have before they are obligated to offer some form of health insurance coverage.

• Provide employee health insurance benefits via the parameters of their own program
- or -
• Pay into a plan primarily dictated under the auspices of the government

While the law was conceived in reaction to the problem of the uninsured, it does have its critics. Some members of both the medical and the small business communities in California are concerned that if employers decide they would rather let the government take care of administering their health plans, this could lead to a shift towards depending on the government, not the private economy, to provide health care.

Others point out that well over 90 percent of the companies that will be affected by the law over the next five years already offer coverage for their employees. Putting the law into effect, and dealing with all the expense, paperwork, and other effort required to so, does not seem worth the effort considering the results will have a real impact on only a small percentage of firms.

While the new law continues to make its way through California’s legislative system, including a ballot initiative, the rest of the country will be watching to see how this controversial proposition is dealt with by voters.