“Efforts to reform our broken health-care system and avert a water crisis are too important to walk away from simply because of a date on the calendar,” he said.
The governor added that lawmakers are “very close” to reaching an agreement on a comprehensive health-care measure.
Before the Legislature had passed Assembly Bill 8 on Monday, the governor vowed to veto it, saying in a statement that it “would put pressure on an already broken health-care system.”
The 123-page bill would require insurers to spend 85% of premium charges on patient care, leaving the remaining 15% for administrative costs and profits.
It would also require employers to spend the equivalent of 7.5% of their payroll on health care for their employees.
“AB 8 is an effort to build upon what we already have, which is predominantly an employer-based delivery system for health insurance,” said Assemblyman Paul Krekorian, whose district includes Glendale and Burbank.
But the 7.5% payroll tax is a cost that some local business owners and small-business advocates — along with Schwarzenegger — say is too high.
“How would you like to have a 7.5% decrease in pay?” asked Harry Hall, owner of Milano’s Italian Cucina and president of the Downtown Glendale Merchants Assn.
Such a payroll tax would unduly burden low-margin businesses like restaurants, and, in Hall’s case, force him to immediately trim his payroll, he said.
“The other alternative is to raise prices to other consumers, and what you see happen is the general public takes a hit,” he said. “Everything trickles down.”
But lawmakers who approved the bill lauded it as a first real step toward comprehensive reform of a system that is largely considered broken.