Court says S.F. employers must pay into health plan

A federal appeals court gave San Francisco a green light today to go ahead with requiring employers in the city to help pay for the city's pioneering universal health care program.

The 9th U.S. Circuit Court of Appeals in San Francisco granted an emergency stay of a trial judge's ruling that had overturned the employer spending requirement.

The spending provision requires businesses with 20 or more workers to contribute financially to the city's plan to provide health care for its 73,000 uninsured residents. Employers must spend a set amount per worker either on their own health plans or on payments to the city.

The stay will be in effect until the circuit court rules later this year on the city's full appeal of the ruling last month by U.S. District Judge Jeffrey White in a challenge filed by the Golden Gate Restaurant Association.

A three-judge panel said unanimously that the city has a strong likelihood of winning the full appeal and that a stay would avoid “preventable human suffering” and serve the public interest.

Circuit Judge William Fletcher wrote, “It is clear that otherwise avoidable human suffering, illness and possibly death will result if a stay is denied.”

In addition, Fletcher said, “the general public has an interest in the health of San Francisco residents and workers, particularly those workers who handle their food and work in other service industries.”

Dan Scherotter, incoming president of the restaurant association, said, “We're disappointed by the decision. We will abide by the law and we believe that when the full appeal is heard the judges will rule in our favor.”

Scherotter, owner of the Palio d'Asti restaurant in San Francisco, said the group had not decided whether to appeal the stay while awaiting the outcome of the full appeal.

City Attorney Dennis Herrera, whose office defended the measure, said, “This is an important victory for thousands of uninsured San Franciscans who will now become eligible to receive health benefits in the next several months.”

City health officials have estimated the employer spending will contribute about $12 million of the annual $200 million cost of the Healthy San Francisco program when it is fully implemented in two years.

The remainder of the cost is paid by city, state and local funding and a sliding fee for participants.

The program began last year on a small scale and has been expanded on a phased basis beginning on Jan. 2. Health officials had said that without the employer contribution, they would have been able to extend the program to only 47,000 of the 73,000 uninsured people within two years, leaving 26,000 without coverage.

Herrera said that about 90 percent of employers in the city already provide health care benefits to their workers and will not be affected by the mandate. White said in his Dec. 26 ruling that the spending requirement

conflicts with the federal Employee Retirement Income Security Act, or ERISA, which regulates employee benefit plans.

But the appeals court said the city measure doesn't interfere with the federal law because employers have a choice of whether to fund an ERISA-regulated plan or make payments to the city.

Fletcher wrote for the court, “The ordinance does not require employers to establish ERISA plans or to make any changes to any existing ERISA plans.”

The mandate requires businesses with 20 to 99 workers to spend $1.17 per hour per employee and those with staffs of more than 100 to spend $1.76 per hour on health care plans or payments to the city.

Scherotter said the restaurant owners' group supports universal health care, but believes its proposal for a quarter-cent sales tax increase to help pay for the plan “is a better solution in every way.”

Ken Jacobs, who chairs the Center for Labor Research and Education at the University of California at Berkeley, said, “A stay on a pending appeal is very rare. It demonstrates a strong opinion by the judges that the health care ordinance will be upheld.”

Jacobs said, “This is very good news, not only for San Francisco but also for state legislation, because the California health care reform proposal includes provisions similar to those at issue in San Francisco.”

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