A landmark health care bill signed into law in California last month could have a tremendous impact on businesses in that state and prompt similar legislation throughout the country. The law requires that, beginning in 2006, businesses with more than 200 employees must offer health care coverage to workers and their families, or pay into a state fund that will provide the insurance. In 2007, the law would apply to companies with 50 to 199 employees, and eventually spread to those with at least 20 workers, if the state subsidizes some of their costs.

Also, the bill requires that companies must pay 80 percent of their workers' health insurance premiums.

The San Francisco Chronicle says many of the details remain vague because the bill was rushed through the legislature just before the recall election. California business groups are worried that this bill will result in many companies moving from the Golden State to friendlier environs. They also point out that California has the reputation of being unfriendly to business.

Even more importantly, some observers say the bill may be a model for other states to follow. On the national level, two U.S. senators say they are working toward introducing such legislation, one of them noting that health insurance is the businesses' responsibility.

There is little doubt that a lack of health insurance is a major problem for many Americans today. Numerous companies, because of double-digit health insurance cost increases, have been forced to reduce coverage, increase premiums or slash family coverage. The rise in health care costs is listed as a major concern of distributors in our 57th Annual Survey of Distributor Operations. The reality is, however, that the health care problem can't be shouldered by business alone. Is there any doubt that companies will scale back their number of employees if they are forced to comply with this new law? And few companies would increase their employment levels because health care costs would soar.

Already, some business associations in California are preparing a legal battle against this bill, and the outcome is uncertain. Similar bills could be coming to your hometown sometime soon. Keep on top of this issue as it comes to your state. It's too important to the future of your business.

jkeough@reedbusiness.com