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By Brad Sears and Lee Badgett

Orange County Register
Sunday, April, 18, 2004

The Register's April 5 editorial ["Still more costly meddling"] on AB 2208, Assemblywoman Christine Kehoe's bill clarifying that existing laws require employers to provide health benefits to employees' domestic partners, misstates the bill's purpose and its impact on California's businesses.

It's important to note that AB 2208 has nothing to do with allowing gays to marry. It merely clarifies existing obligations of equal access to health benefits for domestic partners provided by AB 205, a bill passed last year. It does not impose any new legal obligations, nor does it hinge upon gay marriage.

The editorial asserts that AB 2208 would increase employer costs, but fails to quantify them, peddling fear instead of facts. Whether you assign the costs of providing domestic partner benefits to AB 2208 or prior legislation, the vast majority of California businesses will have no increased costs by offering domestic partner benefits.

Based on a study conducted last fall, the Williams Project estimated that less than 2 percent of California businesses would have any additional costs from offering domestic partner benefits. For most businesses, the average increase in costs will be less than $3,000.

First, thousands of California businesses already provide equal benefits to domestic partners and won't be affected by such an obligation at all. According to a 2001 Kaiser Family Foundation study, 18 percent of workers in the western U.S. work for an employer that already offers same-sex domestic partners' health insurance. One list of such businesses includes over 3,896 large employers headquartered in California.

Why have California companies such as Intel and Walt Disney already adopted such policies? It is simple. They understand their obligation under current California law, and they want to attract and retain the best workers.

Second, an obligation that all businesses provide domestic partner benefits won't increase costs for most businesses at all. Several studies have demonstrated that partner coverage does not significantly increase employers' compensation costs. This is because the typical "take-up rate," or percentage of employees who sign up a partner, is low. A survey of public employers found an average take-up rate of 2 percent, while private employers report a rate of 1 percent at most.

Probably the best predictor of the take-up rate for California businesses is the experience of the state government, which has provided domestic partner benefits to employees for four years. During this time, less than half of 1 percent of state employees have enrolled their domestic partners for health benefits.

Using the take-up rate for state employees, we can project the costs that a legal obligation to provide domestic partner benefits would impose on California businesses. Most California businesses won't have any new partners sign up. Ninety-eight percent of all California businesses, those with less than 100 employees, are so small that the predicted number of enrollees is less than one.

Medium-sized businesses with 100-499 employees (1.8 percent of California businesses) will, on average, have one or two new people sign up. Using the average employer contribution for family coverage for California employers in 2002, we estimate that these new enrollees will cost employers from $3,163 to $6,326 per year.

Larger employers, those with over 500 employees, will see the biggest increase in costs. For example, an employer with 1,000 employees will add 5 new partners. However, only 0.2 percent of California businesses fall into this category and they are the most likely to already provide domestic partner benefits.

In short, few California businesses will be affected by a legal obligation to provide domestic partner benefits, and those that are will see only a slight increase in their overall compensation costs.

Badgett is research director of the Institute of Gay and Lesbian Strategic Studies. Sears is the executive director of the Williams Project on Sexual Orientation Law and Public Policy at UCLA.