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Challenges and Alternatives for Pay-or-Play Program Design

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The California Health Insurance Act of 2003, or Senate Bill 2 (SB 2), was a "pay or play" measure that would have required California employers to pay a fee to the state to provide health insurance unless the employer provided coverage directly, in which case the fee would have been waived. The bill was passed by the California Legislature on September 12, 2003, and signed by Governor Davis on October 5, 2003. The bill was overturned by Proposition 72 in the November 2004 election. The California HealthCare Foundation funded a team, led by the Institute for Health Policy Solutions (IHPS), to analyze the requirements and responsibilities that would have been assigned to the state's Managed Risk Medical Insurance Board (MRMIB) under SB 2; to develop implementation and policy options for MRMIB's consideration; and to contribute to the general knowledge base regarding employer-based coverage strategies. IHPS partnered with RAND and Actuarial Research Corporation to conduct the work.