Associated Press

SACRAMENTO (AP) — The California Chamber of Commerce took the first step Thursday to let voters decide whether to stop a law that would require many businesses to provide their employees with health insurance.

The chamber opposed the law, signed last month by Gov. Gray Davis, that it estimates will cost businesses more than $7 billion and lead employers to lay off people, rather than absorb the higher costs, said Fred Main, the chamber’s general counsel.

The law could give up to 1.2 million workers and their families health insurance through a plan that would be mostly financed by employers.

It requires companies with more than 200 employees to begin offering health benefits by 2006. Smaller companies with more than 20 employees have until 2007 to offer coverage, but companies with 20 to 49 workers only have to provide health insurance if the Legislature also passes a 20 percent tax credit for those firms.

“We think that the measure is going to be bad for both employees and employers,” Main said.

Consumer advocates said they would fight to keep the law in place.

“Clearly, Californians need and want health care, and the chamber should accept that and join with us to make it more affordable by supporting cost controls such as insurance rate regulation, hospital and physician rate caps,” Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights.

The chamber filed papers with the attorney general’s office, which will write the ballot measure’s title and summary, Main said. But the chamber hasn’t decided yet whether it will pursue a ballot measure or fight the law in court.

There is a 90-day window to qualify a referendum and the chamber didn’t want to lose that option, he said.

To put a referendum on the ballot, supporters will have to collect 373,816 signatures from registered voters.