UPDATE: Calif. health care plan advances

SACRAMENTO Calif. The California Assembly on Monday approved the first phase of a more than $14 billion health care reform plan that could include a 1 percent to 6.5 percent payroll tax on employers, based on a sliding scale.

Details about financing have yet to be determined, but the initiative would require almost all Californians to have health coverage by 2010, including an estimated 3.6 million state residents who are currently uninsured. The bill now moves on to the state Senate.

Employers would be asked to spend 1 percent to 6.5 percent of their payrolls – depending on how big their payrolls are – on health care benefits for their employees. If employers don’t offer such benefits, they would be asked to pay the equivalent into a state fund that would help workers secure benefits.

The plan also would be funded by a tax on hospitals and a tobacco sales tax of at least $1.50 per pack of cigarettes.

If approved by the Senate and signed by the governor, the funding mechanism of the proposal would go before voters in November for final approval.

Observers predicted that the plan would continue to evolve as it is drafted in light of strong opposition from labor and business groups, including the California Restaurant Association.