(Jan. 15) California Gov. Arnold Schwarzenegger’s $12 billion health care plan for all of the state’s residents looks like a huge blow to small businesses, which describes many California produce companies.

Among the specifics, the governor’s plan mandates that all businesses with 10 or more employees would either provide their employees with health care coverage or pay a tax to the state equivalent to 4% of their payroll so the state can provide coverage.

California, and the country as a whole, has a health care problem with so many uninsured people. But this plan would no doubt have unintended consequences that would damage the produce industry.

As many large companies already provide health care to workers out of necessity, the plan would hurt small businesses that don’t have the economies of scale to offset the costs.

It would affect produce prices. Companies would not eat the costs. They would pass them on. Some firms would simply close their doors, others would sell their land to developers, and the plan could force further consolidation.

Excessive government intervention tends to make bad economic situations worse, as California politicians’ meddling in energy trading in 2001 contributed to its energy crisis.

Then there’s the issue of illegal immigrants, who would be covered under the governor’s plan.

The health care problem won’t be easily rectified, but making small businesses stretch their resources even further would cause more problems than it would solve.