Prepared for: San Mateo County Blue Ribbon Task Force on Adult Health Care Coverage Expansion

1. Prepared for: San Mateo County Blue Ribbon Task Force on Adult Health Care Coverage Expansion Opinion Research regarding Health Coverage ExpansionPresentation of Findings EMC Research, Inc. 436 14th Street, Suite 820 | Oakland, CA 94612 | (510) 844-0680 October 2007; EMC #07-3724

2. Project Purpose Provide feedback on opinions regarding proposed health care reform. Hear from businesses that do not offer healthcare coverage to their employees. Hear from community leaders and organizations representing local business and workers. Identify attitudes regarding healthcare, publicly provided/funded healthcare and specific elements of the proposed coverage. Identify strength and intensity of opinions.

3. As with any opinion research, the release of selected figures from this report without the analysis that explains their meaning would be damaging to EMC. Therefore, EMC reserves the right to correct any misleading release of this data in any medium through the release of correct data or analysis. Telephone survey San Mateo Businesses At least 2 full time employees in San Mateo County Offering health coverage to less than half of all employees 140 completed interviews October 26-November 30, 2007 Margin of error + 8.3% MethodologyBusiness Telephone Survey Please note that due to rounding, percentages may not add up to exactly 100%

4. MethodologyStakeholder Interviews Conducted by Eileen Goodwin of Apex Strategies In-depth interviews with 21 individuals representing: Local business leaders Labor Business Associations Chambers of Commerce Active small business owners Some task force members

5. Telephone Survey

6. Notes on the methodology Survey designed to include any San Mateo County Business with two or more local employees that is not offering health insurance to any employees. Based on the results of the early calling, the screening and sampling were adjusted somewhat: Businesses with over 50 employees were excluded from the sample. Contacts were difficult to reach and almost all were offering health insurance Calling targeting toward business types that were likely to fit the qualifications Screening criteria were changed to include any business with ten or more employees that do not offer coverage to at least 50% of employees

7. Findings from the Calling Through extensive calling we were able to talk with 1,499 business. 9% (140) were qualified and completed the survey 13% (201) did not have someone local that is responsible for employee benefit issues 41% (609) have fewer than 2 employees that are local and work full-time 28% (419) offer health insurance to at least half of their employees 4% (57) were not able to conduct the survey in English 5% (73) were qualified for the survey but were not able to finish

8. Most of the surveyed business are very small with at least some low income and part-time workers 47% have only fulltime workers, the balance have some part-time. 53% are 2 to 5 person companies, only 8% have more than 16 employees. 28% pay all employees less than $40K annually, 48% pay some of their employees this wage. 17% report that all of their employees earn more than $40K/year. 58% have an annual gross revenue of less than $750,000 a year. 51% generated a net profit in 2006. 50% of the respondents were company owners and had insurance for themselves.

9. Most businesses are in the service or retail industries Services (eg. child care, consulting, beauty shops)45% Retail trade (includes stores & restaurants) 24% Finance, Insurance & Real Estate 11% Manufacturing 7% Construction 5% Wholesale trade 4% Transport, Communications & Utilities 2% Agriculture, Forestry & Fishing 1% Mining 1% Nonclassifiable 1%

10. Regions in the survey Northern County 17% Central County 43% Coastal County 8% South County 21% Remainder (Unincorporated, Responded “San Mateo County,” and Refused) 11%

11. The vast majority of businesses are very concerned about the cost of health insurance

12. Employers would like to offer health insurance for all their employees, and the majority would also ideally like to pay for it

13. Businesses do not think they can afford health insurance, and many employees have coverage from another source

14. Some are concerned about the lack of competitive advantage for employee recruitment, but many are not

15. Opinions are mixed on other health insurance related issues

16. While the majority disagree, a sizeable percentage of lower income employers still feel their lower-wage employees can afford to pay for their own healthcare Q16 My employees can afford to pay for their own health insurance;

17. Most businesses have never offered insurance to their employees Did you stop offering health insurance to your employees in the last year, 2 to 5 years ago, more than 5 years ago, or have you never offered health insurance to your employees?

18. More than half think they are not likely to offer a health plan to employees within the next two years Is it very likely, somewhat likely, somewhat unlikely or very unlikely that your business will offer a health plan for employees in the next two years?  49% unlikely to offer health plan  44% at least somewhat likely to offer plan

19. Businesses think a health plan would cost a lot more than they are willing to pay…

20. …but most claim they are willing to pay at least something for health insurance

21. A little more than half support a proposed County’s healthcare reform effort As you may know, San Mateo County is considering a healthcare reform policy that would guarantee health care coverage to all low income county residents, that is, individuals who earn less than $40,000 annually. This health coverage would provide primary and preventive health care, hospital services, prescription drugs, vision and dental care. All San Mateo County employers would be required to meet minimum health spending standards by offering health insurance or paying into a County fund.  Overall Support: 56%

22. Comprehensive coverage, a wide network of providers and sliding scale cost are positive components

23. Lack of portability is a strong negative, and many are opposed to a payment requirement for businesses

24. Support rises after hearing information about the coverage Given what you’ve heard, do you support or oppose health care reform in San Mateo County that would guarantee health care coverage to all low income San Mateo County residents?  Overall Support: 67%  Overall Support: 56%

25. Less than half want to pay into a County fund for employee coverage, about one-third are strongly opposed There have been a number of proposals for how to fund this program. Remember, the goal is to create a County fund that would provide health insurance to all low income uninsured adults. Thinking about your own business, would you be willing or unwilling to pay into this County fund?  Willingness 49%

26. There is no common amount that businesses think is reasonable to pay per worker And what do you think is a reasonable amount for your business to pay, per worker, into this County fund? (open end)

27. A fee per hour worked is popular, but probably because of the small business exemption

28. More than half at least somewhat support a annual health fee

29. A 7.5% minimum also receives mixed response

30. When given the choice, a plurality choose the fee per hour, but no one proposal gets an overwhelming vote of support Thinking about those three proposals, in order to provide health insurance to all low income County residents, would you prefer for the County to implement:

31. Of the 40% that mentioned something they liked about the proposals, many felt it’s a step in the right direction and liked the small business exemption

32. Among the 49% that mentioned something they don’t like about the proposals, a number of reasons are given

33. Stakeholder Interviews

34. Finding #1 Conclusion: The stakeholders are divided on their support for the County taking on this issue. While almost everyone supports the “conversation” many are concerned about unintended consequences to businesses (especially small businesses) and the potential for new fees to drive business from the County. Recommendation: • Need to benchmark what (if anything) has happened to businesses in other areas where these fees are in place i.e. San Francisco. • Need to be clear if small businesses (defined by most as 4-5 employees) or low profit businesses (the restaurant industry was cited by many) will be treated differently. • Clarifying these issues could help with acceptance.

35. Finding #2 Conclusion: Most of the stakeholders prefer that the health care issue be addressed at the State or Federal level and question the ability for the County to really do something meaningful at the County level. Also, several stakeholders expressed concern about “double dipping/double paying” if something were to be enacted at the State or Federal level. Recommendation: Need to clarify how any local spending requirement would relate to any requirements put in place at another level of government.

36. Finding #3 Conclusion: The stakeholders embraced no preferred mechanism of payment. Several felt a proposed half-cent sales tax would not be workable and “vowed to work against” this payment mechanism. Other stakeholders like the idea of spreading the contributions over more than just those who are working or employing people. Recommendation: Determine whether the sales tax is in fact “on the table” and if it is not then stop discussing it. Continue to look at other mechanisms (such as bonds or cigarette taxes) and define the specifics of collection, as there were a lot of questions about how a countywide fee could be collected through a city business licensing procedure.

37. Finding #4 Conclusion: Most stakeholders do like the idea of preventive health care being part of the coverage offered through a program expansion and almost universally the stakeholders articulated that they wanted to get people to stop using the emergency rooms for basic coverage. Recommendation: Benchmark how much taxpayer money could be saved by reducing the emergency room visits. Educating the employers and taxpayers of these savings could help acceptance of the program.

38. Finding #5 Conclusion: Several employer stakeholders lamented the cost of providing healthcare to employees and wished they could offer more and better coverage for a reasonable cost. Recommendation: Look at expanding the pool of who could be covered under the program to include small businesses and work the economics of the pool as a benefit of being in business in San Mateo County.

39. Conclusions

40. Key Findings The San Mateo County business community is very concerned about the cost of healthcare and generally supports universal coverage. Those currently not offering insurance feel that they are unable to afford the likely cost of covering employees. Mandating or requiring coverage will make some unhappy, and could garner strong opposition. Exempting small businesses from any coverage requirement would be popular. Lack of portability and coverage for only San Mateo residents is a problem for many. Most want state/federal change, explaining how a local program fits in will be important.