In spring 2004, the California HealthCare Foundation (CHCF) selected the Institute for Health Policy Solutions (IHPS), in collaboration with the RAND Corporation, to conduct an in-depth implementation study and analysis of California's landmark "pay-or-play" legislation: The Health Insurance Act of 2003 (SB 2). Although it was subsequently overturned by a narrow margin in a November 2004 referendum, the passage of the legislation provided a unique opportunity to assess and to evaluate the implementation issues and challenges presented by coverage expansions for workers and families.

SB 2 would have required certain California employers to either "pay" the state a fee, which the state would use to cover specified workers and dependents, or "play" by covering their workers directly through employer-sponsored coverage. Our study focused principally on the viability of the State Health Purchasing Program (SHPP)-the purchasing pool SB 2 would have established to serve as the coverage vehicle for the workers of "pay" employers.

More generally, the study is intended to assist decision-makers in the design of manageable, effective and sustainable coverage expansions for workers and their families. Much of the analysis can help inform a range of alternative approaches involving one or more of the important features of SB 2: employer-financed coverage (and related ERISA issues); health insurance purchasing pools; premium subsidies for low-income populations; and/or individual mandates.

The Executive Summary summarizes the findings of this research. The larger main report presents the findings in detail. Several Supplements explore particular issues in greater detail.