Letter to Speaker Nunez

The Honorable Fabian Nunez
Speaker, California State Assembly
State Capitol
Sacramento, CA 95814

Dear Speaker Nunez:

On behalf of the more than 10,000 members of the Consumer Alliance for a Strong Economy, I am writing to express our organization’s opposition to AB 1 X1, the California Health Care Reform and Cost Control Act.

Your legislation would greatly expand the role of the State of California in the administration of healthcare in California at substantial costs to taxpayers. This legislation would also significantly raise taxes on small business owners by imposing a payroll tax increase. Companies with payrolls in excess of $250,000 would be required to pay a 6.5% tax on payroll to fund a universal healthcare program to be administered by the State of California.

While we appreciate the desire to bring about reform to California’s healthcare system, we believe a better approach would be to encourage people who are currently uninsured to purchase health insurance by allowing them to deduct their expenses when they file their state income tax returns. There are also a number of other incentives that can be offered to taxpayers who seek to obtain healthcare coverage that could be offered without creating a government-run healthcare bureaucracy that is estimated to cost in excess of $12 billion per year.

Our specific objections to this legislation are many, but the primary aspects of the bill that we find objectionable include:

1. Individual Mandate: We believe that imposing a mandate on individuals to carry comprehensive health insurance is not sound public policy. While we should encourage people to carry insurance through tax credits and allowing the full deductibility of health insurance premiums, we believe forcing people to carry insurance moves government in the direction of taking an increased role in the daily lives of citizens of California;

2. Imposition of another unfair labor practices penalty: We believe that creating a new unfair labor practices penalty in the event that an employer can no longer afford to offer health insurance to their employees would have a dampening effect on the California economy. Most businesses already offer health insurance as a way to attract highly qualified employees. However, if costs of healthcare insurance become too much for an employer to bear, that employer should not be subject to civil and criminal penalties that are associated with unfair labor practices complaints;

3. Community Makeover Grant Program: We believe the establishment of a government public relations program to discourage obesity is a waste of taxpayer money. Funds that would be paid to public relations firms under this program could be better spent on vital public services such as road construction and law enforcement.

4. Reliance on federal funds: It appears that this legislation is largely dependent upon additional federal funds. We believe it is fiscally irresponsible to create a program that supposes a large infusion of additional revenue from the federal government. If the funds do not materialize, we believe the costs will ultimately be born by California taxpayers.

5. Payroll tax increase: Many businesses (large and small) have payrolls in excess of $250,000 per year, and this legislation would impose a 6.5% tax increase on these employers. In a state with one of the highest tax burdens in the nation, now is not the time to suggest raising taxes on the job creators of California.

On a more global note, we believe this program would have the practical effect of forcing people out of private health coverage into a government-run system administered by the State of California. By forcing employers to pay more in payroll taxes, we further believe that the economy will be adversely affected due to small businesses being forced to either scale back or even leaving the state altogether.

On a positive note, we appreciate your intent to raise the issue of healthcare reform. While the Consumer Alliance for a Strong Economy strongly objects to the passage of AB 1 X1, we look forward to working towards creating a healthcare system that encourages personal responsibility, offers market-based alternatives to a government-run system, and increases access to medical care with minimal impacts on taxpayers and small businesses.

Thank you for this opportunity to share our position with you, and please feel free to call me with any questions.

Christopher Wysocki
Consumer Alliance for a Strong Economy

CC: Members of the California Legislature

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