I recently introduced a pro-business amendment to the Health Care Security Ordinance, which will close a loophole currently being exploited by a minority of San Francisco employers, and thus level the playing field for the vast majority of our businesses that comply with the letter and spirit of the law.
The HCSO, passed unanimously by the Board of Supervisors in 2006, established a spending requirement for businesses with 20 or more employees. The law is generally working. The vast majority of employers meet their expenditure obligation by providing health insurance to their employees. In fact, 90 percent of all health care spending in 2010 went to health insurance. Unfortunately, a minority of employers have elected to meet their obligation — in whole or in part — in a harmful way: they “allocate” money to health reimbursement accounts, affirmatively restrict how workers can access these funds (e.g. no reimbursements for dental care, vision care, insurance premiums, etc.), and then wipe out the account balances at the end of the year. In 2010, employers were credited with making $62 million in expenditures toward their spending obligations, but actually spent just $12 million; the employers retained the remaining $50 million.
This practice has a series of victims.
First, it’s unfair to the more than three-quarters of San Francisco businesses who faithfully make meaningful health care expenditures and are forced to compete with businesses that don’t.
Second, it’s bad for workers. Reimbursement accounts — when coupled with restrictive policies and annual wipe-out provisions — leave workers in the lurch. They never accrue more than a few thousand dollars in the account, which isn’t enough to cover a single medical emergency, much less a serious ongoing health condition. And they’d best not get sick in January, when their account balance has been wiped clean.
Third, it’s bad for taxpayers. An affirmative goal of the HCSO was to help reduce the burden on San Francisco taxpayers — who were effectively paying for the health care needs of The City’s estimated 82,000 uninsured residents at that time (half of whom were employed).
Finally, it’s bad for consumers, who often pay a premium for their meal or other service in the name of “employee health care,” and would be shocked to learn that some businesses retain the majority of these extra charges.
My amendment simply restores a common-sense definition of what it means to spend money on health care. In doing so, it levels the playing field for all San Francisco businesses, ensures more meaningful health care for workers, and protects the interests of taxpayers and consumers.
The Chamber of Commerce claims that my amendment will lead to job loss and business closures — the same claims they made when the original ordinance was passed. But the research refutes them. In August 2009, William H. Dow, a senior economist for President George W. Bush’s Council of Economic Advisers, co-authored an op-ed in the New York Times based on his academic research. Dow wrote, “As of December 2008, there was no indication that San Francisco’s employment grew more slowly after the enactment of the employer-spending requirement … The San Francisco experiment has demonstrated that requiring a shared-responsibility model — in which employers pay to help achieve universal coverage — has not led to the kind of job losses many fear.”
David Campos is the supervisor for District 9 in San Francisco.