A federal judge rejects California’s effort to force public health students to pay for private health care
San Francisco, CA – A federal court on Thursday rejected California’s efforts to force private health insurance companies to cover all public health scholarship recipients under a state law.
The judge in the Northern District of California, William H. Orrick, issued a preliminary injunction on Monday to block the state’s law, Proposition 20.
The state is challenging the law on the grounds that it violates a federal law known as the Public Health Service Act (PHSA), which bars states from requiring private companies to provide health coverage to all people.
Opponents of Proposition 20 say it would force private companies that already offer private health coverage, such as Health Net, to pay higher premiums, limit access to medical care, and limit choices of care.
The challengers also say the law would lead to a loss of the federal government’s investment in public health.
Orrick found that the state had failed to prove that the law was a substantial burden on private insurers, and that Proposition 20’s implementation would be unwise.
“The Court concludes that Proposition 19 fails because it imposes substantial costs on the private health plans of the state, and the costs of Proposition 19 are offset by a tax on the health plans’ profits,” Orrick wrote in his order.
The court also rejected the challengers’ contention that the proposed tax would violate the PHSA, which prohibits states from levying taxes on the profits of health insurers, as well as on the value of any contract entered into by a health insurer.
A federal judge in Oregon in August rejected a similar challenge to Proposition 20, saying that it was unconstitutional because it would impose significant costs on health insurers.
Proposition 20 has been on the ballot in California since 2016.
The measure would have required employers to provide paid health insurance to all employees.
The legislation was defeated in the state legislature in November.