Employee health fund debate may go to San Francisco voters

After months of debate, a change to how hundreds of businesses must provide health benefits for employees was approved Tuesday despite sharp criticism it did not go far enough for workers.

Opponents of the compromise measure passed by the Board of Supervisors vowed to take the fight to the ballot box.

In one of the most intense political debates of the year, ideological battle lines were drawn over how to change the way about 900 businesses use health reimbursement accounts to comply with San Francisco’s landmark Health Care Security Ordinance.

The debate began earlier this year when it was discovered that 80 percent of the money going into these accounts, which are used by about 30 percent of businesses covered by the law, was not spent on workers’ medical costs, but went back to employers. Last year, that amounted to $50 million. The law mandates health care spending per employee per hour worked.
Supervisor David Campos’ legislation that would have required these employers to keep the funds accruing in the accounts in perpetuity was vetoed by Mayor Ed Lee amid pressure from business leaders who said the $50 million hit would cause layoffs and business closures.

Board of Supervisors President David Chiu offered a compromise, which was supported by Lee and approved by the board Tuesday in a 6-5 vote. The law requires employers to allow workers to accrue up to two years of health care spending and increased notification of the benefit and what it can be spent on.

While business leaders praised Tuesday’s vote, labor leaders blasted it.

“It is very sad that I am actually standing here today,” said Tim Paulson, executive director of the San Francisco Labor Council, which supported not having a limit on funds accrued in the accounts. “This is not a compromise. San Francisco is going to go backwards on health care under the watch of this Board of Supervisors.”

But Steve Falk, president of the Chamber of Commerce, said, “We fixed the key issues and we protected jobs. That sounds like a great compromise.”

The fight is far from over. Expect voters to ultimately decide this one.

“We may be losing this battle, but the war is not over,” Campos said. “This amendment does not close the loophole. We need to make sure that we take this to the voters.”


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