New Study Says Passage of Proposition 72 Would Destroy Up to 150,000 Jobs

Up to $12.9 Billion in New Costs to California Businesses, While Nearly 70 Percent of Uninsured Will Remain Without Coverage
  • Publication Date: September 2004

  • Topics: Health Care

Sacramento – California voters will hold the fate of up to 150,000 of the state’s least-skilled employees when they vote on Proposition 72 on Election Day. A new study by The Employment Policies Institute (EPI) reveals that Proposition 72, which would require all employers in the state with 20 or more employees to provide full medical insurance for their employees, will cost businesses up to $12.9 billion per year and result in as many as 150,000 lost jobs. The study was conducted by Dr. Aaron Yelowitz, a nationally respected labor and health economist at the University of Kentucky and a research fellow at the National Bureau of Economic Research. Prior to the University of Kentucky, Yelowitz spent seven years as an economist at UCLA.

Looking at the high number of lost jobs, Yelowitz notes that most of the displaced employees will tend to be younger, poorer, less educated and disproportionately minorities. For example, while Hispanics make up only 30 percent of the workforce, they will bear 53 percent of the job losses.

The most troubling news about Proposition 72’s high price tag and enormous job loss is the fact that the majority of the uninsured will still remain without coverage. Only 31 percent of uninsured Californians would receive new coverage as a result. Only 30 to 35 cents of every dollar spent under the initiative goes toward covering the uninsured.

Yelowitz utilized data sets from the Current Population Survey of the U.S. Census Bureau and Bureau of Labor Statistics, County Business Patterns, and premium and cost-sharing information from the Kaiser Family Foundation California Employer Health Benefits Survey.

“Providing insurance to the uninsured is a laudable goal, but Proposition 72 is an extremely poor vehicle for doing so,” said EPI Research Director Craig Garthwaite. “The staggering price tag to business will lead to tremendous job loss to California’s least-skilled workers while an overwhelming number of uninsured will remain without coverage.”

Visit http://www.epionline.org/study_detail.cfm?sid=77 to download “The Economic Impact of
Proposition 72 on California Employers”