San Francisco’s smaller businesses — whichwould be hardest hit by a proposed funding mandate to provide health care to The City’s uninsured — may be allowed to delay payment into the controversial program, according to some city officials.
The potential compromise may come as a result of a report released by The City Controller’s Office, which said businesses with 20 to 50 employees would suffer immediate and significant negative impacts from the proposed ordinance. These businesses hire a greater proportion of low-wage workers, have more part-time staff, are less likely to offer health insurance and have lower profit margins.
The City could offer a lower-mandated spending minimum or an extended transition time to mitigate the risk to smaller companies, the report suggested.
Under the ordinance, businesses with 100 or more employees would be required to pay an average of $273 per month to pay for health care for each full-time employee and businesses with 20 to 99 employees would pay $182.50 per month. A prorated amount would be required for part-time employees. Businesses with fewer than 20 employees would be exempt.
For businesses with 20 to 50 employees, the anticipated first-year cost would be from $43,879 to $109,698 per year per business, according to the report.
“We assume that when you cost businesses that much money, they will have to absorb it in different ways and that there will be some price increases and loss of jobs,” City Controller Ed Harrington told the Board of Supervisors budget and finance committee Monday.
A phase-in period for smaller businesses could work, said the mandate’s author, Supervisor Tom Ammiano, noting that the legislation is likely to go through changes as it circulates through the various board committees.
The amount required from businesses would contribute up to $49 million to a $200 million plan to provide access to primary care as well as emergency services to the approximately 82,000 San Franciscans without health insurance — more than half of whom have jobs. The City is redirecting $104 million of funds for the plan, and another $56 million is expected to be raised through sliding scale premiums paid by participants.
Dr. Mitch Katz, San Francisco’s public health director, said that because The City is creating the infrastructure for the new program, it would enroll participants in stages. As a result, The City could afford not to collect payment from smaller companies while holding off on enrolling their employees.
“Some small businesses will need time to plan for how they’re going to financially handle this, whether that’s raising the prices on the menus or changing their structures,” Katz said.