SAN FRANCISCO RESTAURANT OWNERS PLEDGE APPEAL OF OWNER MANDATED HEALTH CARE FUNDING

A restaurant association spokesman said today the group will appeal a federal circuit court ruling that upheld an employer spending mandate in the city of San Francisco’s universal health care program.

Kevin Westlye, executive director of the Golden Gate Restaurant Association, said, “We obviously disagree with the judges’ ruling.”

Westlye said the group hadn’t yet decided whether to appeal to an expanded 11-judge panel of the 9th U.S. Circuit Court of Appeals or to go directly to the U.S. Supreme Court.

Today’s ruling on the Healthy San Francisco program was issued by a three-judge panel of the appeals court.

San Francisco Mayor Gavin Newsom, meanwhile, called the decision “a huge victory for this city and the 46 million Americans who don’t have health insurance.”

Newsom maintained, “By thinking outside the box, every city and state in this country can provide health care if they are willing to challenge the conventional wisdom and take risks instead of continuing the status quo.”

The Healthy San Francisco program, enacted by the Board of Supervisors and signed by Newsom in 2006, is intended to provide coordinated health care to the city’s 73,000 uninsured residents.

Part of the cost — an estimated $12 million out of $200 million annually — is to be paid by employers, who have a choice of either setting up a health insurance plan for their workers or making payments directly to the city.

The rest of the cost is paid by government funding and sliding fees for participants.

The restaurant association claimed the employer spending requirement was illegal because it conflicted with a federal law that regulates employee benefit programs.

But the appeals court said there is no conflict because employers have the option of either offering a health plan or paying a fee to the city.

Judge William Fletcher wrote that providing health care services to low-income residents “has long been the province of state and local governments.”

Westlye said the association contends the measure violates the federal law, known as the Employment Retirement Income Security Act or ERISA, by imposing administrative and record-keeping burdens on employers.

City Attorney Dennis Herrera called the ruling “a sweeping victory for the city’s effort to provide comprehensive health care for the residents of San Francisco.”

The program went into effect in January and is being phased in over two years. Healthy San Francisco spokeswoman Eileen Shields said the plan now serves 30,000 residents.

The spending requirement applies to businesses with 20 or more workers.

Those with 20 to 99 employees must spend $1.17 per hour per worker on either a health plan or fees to the city, while companies with staffs of more than 100 must pay $1.76 per hour.

As of May 1, more than 700 employers had chosen to make payments to the city on behalf of 12,900 workers, according to Newsom’s office.

Today’s decision overturns a ruling in which U.S. District Judge Jeffrey White of San Francisco concluded in late December 2006 that the spending mandate did conflict with ERISA.

White’s ruling did not keep the program from going into effect, however, because the appeals court issued a stay of White’s decision in early January while it considered the city’s appeal.

The Bush Administration’s Labor Department filed a friend-of-the-court ruling on behalf of the restaurant association, while several labor groups joined the city in defending the measure.

Ken Jacobs, chair of the University of California, Berkeley, Center for Labor Research and Education, said, “The health spending requirement is vital for San Francisco’s universal health care plan. Without it, employers would have an incentive to drop health coverage and have their
workers go onto the city’s health plan, which would explode the program’s cost.

Jacobs said, “States around the country are watching this case very closely. The lack of clarity in the law has been a major impediment to health care reform.”

See Related: FEDERAL APPEALS COURT RULES SAN FRANCISCO UNIVERSAL HEALTH CARE MANDATED EMPLOYER CONTRIBUTION LEGAL – GOLDEN GATE RESTAURANT ASSOCIATION CHALLENGE REJECTED

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