YOU ARE HERE: LAT HomeCollections

CALIFORNIA ELECTIONS / PROPOSITION 186 : Bank Memo About Effect of Single-Payer Plan Is Denounced : American Savings employees are told that tax hikes mandated by the measure would bring benefit cuts and endanger their retirement plan. Initiative backers decry 'coercive tactics.'


The corporate campaign against the single-payer health care initiative, Proposition 186, took a new turn Monday with release of a memo from the head of American Savings Bank warning employees that big tax increases mandated by the initiative would end company contributions to the employee retirement plan and force other cuts in benefits.

Initiative supporters who gathered outside the bank's branch in Downtown Los Angeles released copies of the memo and said they intend to file a complaint of unfair campaign practices against the bank over what they termed "coercive tactics."

The memo, drafted by Mario J. Antoci, chief executive officer of the bank, said that if Proposition 186 passes it will cost the company an additional $6 million annually in medical benefits because of a new payroll tax of 8.9% on the bank.

"So, where would we get the additional $6 million that Proposition 186 would cost? We would be forced to reduce our other benefit areas to make up the shortfall," Antoci said, and pointed to the $4.8 million the company puts into its 401(k) retirement plan and another $1.2 million in the payroll-benefit area.

The chief executive officer ended the memo by explaining that although he will vote "no" on Proposition 186, he wanted his employees "to make an informed and independent decision based on what's best for you and your family."

The supporters of the measure complained that the bank, by paying the cost of putting out the memo to its 3,500 employees statewide, was making what amounted to an in-kind contribution to the campaign to defeat the initiative. They argued that the contribution should be reported to the secretary of state, which has not been done.

"It's an underhanded tactic (to) lean on your employees like this and try to influence their vote," said Jeff Wagner, a spokesman for the initiative campaign.

American Savings Bank fired back with a statement that the memo had nothing to do with the formal anti-Proposition 186 campaign and was generated internally to keep its employees informed.

"American Savings Bank made no contributions to Proposition 186. American does not make corporate contributions regarding propositions," said Dianne L. Seeber, a vice president of the bank. A statement released by the bank reiterated that it "would never presume to advise employees how to vote."

The heat generated by the memo reflects the high level of concern in many corporate boardrooms over Proposition 186, a sweeping proposal that would dismantle the current health system based on private insurance and replace it with a state-run system.

In recent days, State Farm Insurance has disclosed contributions of more than $900,000 to kill the initiative. Nearly all of that went into letters mailed to State Farm's 2.5 million policyholders in California calling the initiative "bad medicine" and urging them to vote against the initiative.

The State Farm letters, signed by agents or company executives, cite massive new tax increases proposed by the initiative to pay for the new system and point to studies saying that the measure could lead to the loss of 300,000 jobs. The letters close with the statement that the current health care system is not perfect "but Proposition 186 is not the answer."

PacificCare of California, a health provider, also disclosed that it sent out 600,000 letters to policyholders and physicians that criticized the initiative in strong terms.

The letters and the memo were one-sided and did not mention what supporters of the measure consider Proposition 186's strong suits: cradle-to-grave health coverage that could not be taken away because of illness or job loss, studies that show Californians would save--even with the tax increases--significant money by being freed of insurance premiums, and current inequities that deny coverage to an estimated 6 million state residents.

Supporters of the measure complain not only about the content but also about the use of customer dollars for what they claim are political purposes.

Los Angeles Times Articles