At the Latin Business Association, we recognize the importance of a healthy workforce, which is why we support the implementation of the Affordable Care Act (ACA). When fully implemented, the law is expected to expand access to health coverage to millions of Californians, many of whom are Latino. Currently, nearly 60 percent of California’s uninsured population is of Hispanic descent. As we track the implementation and impact of health care reform on Latino-owned businesses, new legislation AB 880 (Gomez) raises concerns for our community.
As businesses are planning for the ACA’s implementation, our state leaders should be supporting them – not making an already daunting task even harder. Unfortunately, AB 880 further complicates our plans to provide care for our workforce by adding confusing requirements and hefty fines.
Under the ACA, all businesses with more than 50 employees will be required to offer health care coverage to full-time workers. This will be a massive undertaking, and its impact on the Latino business community – still struggling to recover from the Great Recession – remains to be seen.
AB 880 would require businesses to pay the state an additional fine – up to three to six times the cost of the federal fine — for each employee who chooses to enroll in the state’s Medi-Cal program. The penalty is estimated to cost as much as $15,000 per person, and it would apply for every employee working only more than eight hours a week.
There are more than 800,000 Latino-owned businesses in California, providing quality jobs and benefits to thousands of people across the state. As California’s Latino population continues to grow — by 2020, 40 percent of the state will be of Hispanic descent — the Latino business community will play a key role in our state’s economic recovery and prosperity. In fact, Latino-owned businesses are growing at a much faster pace than other businesses. Instead of stifling this much-needed growth, we should support and encourage it.
The fines created by AB 880 will not actually provide health coverage to anyone; they will simply add another burden to businesses already struggling to meet the requirements of the ACA. Those impacted may be forced to leave the state or, worse yet, close their doors.
And the law won’t just affect businesses; consumers and employees may be impacted as well. Some businesses may be forced to reduce their workforce because of the costs of the fines. Part-time work may disappear completely as companies will fearful of severe fines. By severely fining businesses, AB 880 also discourages them from hiring disadvantaged, hard-to-employ, and displaced individuals. This group includes many Latinos, whose unemployment rate is still hovering around 10 percent. In other words, this legislation will hurt the exact individuals it was intended to help.
As the voice of more than 800,000 Latino-owned businesses, we know that smart business owners want to retain their employees and keep their workforce happy. We also know that job growth is essential to California’s prosperity and health. AB 880 will not expand access to health care; instead, it will create confusion and penalties based on fear of what employers may or may not do. Instead of pushing legislation that harms California’s businesses and workers, our state leaders should partner with businesses to build on California’s emergence from the Great Recession, while developing healthier, stronger communities.
Ruben Guerra is Chairman of the Board & CEO President of the Latin Business Association.