Mayor’s health care task force has not reached consensus on blending Healthy SF, Affordable Care Act

Mayor Ed Lee

With many provisions of the Affordable Care Act taking effect Jan. 1, confusion persists in San Francisco over how to mesh the federal mandate with The City's 7-year-old landmark universal health care program.

The 41-member Universal Healthcare Council — established by Mayor Ed Lee in July amid a political quarrel over how employers can deal with both health-related mandates — has yet to reach a consensus on the issue. The local Health Care Security Ordinance requires city employers to contribute to their employees' health expenses.

The task force's final draft report provides 29 separate recommendations, and some seem to contradict each other.

“The majority don't know what to do right now,” Regina Dick-Endrizzi, executive director of the Office of Small Business, said of local business owners. “There was hope that there might be some sort of consensus direction.”

The recommendations illustrate the many unresolved issues. One suggests eliminating the local mandate for businesses with fewer than 50 employees, while another calls for lowering the health care expenditure rate. The 2014 rates are $1.63 an hour worked per employee for businesses with 20-99 employees, and $2.44 an hour worked per employee for those with more than 100 employees.

One of the largest impacts on the local program relates to the federal law's disallowing of most stand-alone health reimbursement accounts, which had been a preferred method for some small businesses, as funds are accrued in the account that allows unused funds to eventually revert back to the employer.

Other options to comply with the law are to provide private insurance or to elect the city option, which includes Healthy SF for lower-income residents or a medical reimbursement account.

Some suggest these businesses should use the city option's MRA accounts, but there are some key differences. For one, the money must be invested upfront and employers don't get the unused money back — The City does. Business advocates warn of disastrous impacts such as business closures and layoffs.

The lack of resolution has created much confusion. On Friday afternoon, the Small Business Commission failed to make sense of the council's work and postponed a vote on taking a position on its recommendations until Jan. 9.

“I'm completely confused by this whole thing. I don't even know what to ask or say, honestly. And I run a company with 26 employees,” said Commissioner Mark Dwight, owner of the messenger bag manufacturer Rickshaw Bagworks. “I hired someone to help me figure it out and I'm hoping that person doesn't make a mistake.”

For many, not much will change with the new health care law. Eighty-eight percent of The City's employers offer insurance to some or all of their employees.

In 2012, 90 percent of the $1.88 billion in health care expenditures in San Francisco was spent on health insurance. The next largest expense was $107.2 million, or 5.7 percent, in the form of health reimbursement accounts.

The council plans to deliver a final report to the mayor this week.

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