Businesses fight plans to ensure health care
17 01 08 - 14:27
When he's not conjuring the latest dishes from Italy for his upscale restaurant in San Francisco's financial district, owner and chef Dan Scherotter is worrying about health insurance.
Although he provides health coverage for his full-time workers, a new city law says the amount he pays each month — $130 per employee — isn't enough.
Under the law, which provides health coverage for all city residents, Scherotter says he would need to pay about $206 toward each full-time worker's medical costs every month. As a result, employees' share of costs at his Palio d'Asti restaurant would decline from $80 a month to $4 for the lowest-cost plan.
Scherotter, the incoming president of the Golden Gate Restaurant Association, says the San Francisco law is illegal, unaffordable and an administrative nightmare.
To comply, he says, "I would have to hire a new accountant and fire a few cooks."
His association sued the city in November 2006, saying the employer payments violate federal law.
Resolution of the case could help answer a critical question: Can states require employers to help cover the uninsured if they don't offer health coverage to their employees?
Increasingly, state and local lawmakers are crafting their own ambitious health plans in the absence of federal action.
States take the lead
In 2006, Massachusetts became the first state to require all residents to carry insurance and insurers to sell to all who apply.
Funding for the program came mainly from state and federal sources, but employers who do not offer health insurance must pay an annual fee of $295 per worker into a fund to help cover the uninsured.
The low fee and efforts to get the business community on board before the law passed are credited with preventing any legal challenges.
Other states have different approaches:
•California. Gov. Arnold Schwarzenegger has spent more than a year pushing for a $14 billion health plan aimed at covering most of the state's estimated 6.7 million uninsured.
The plan would be funded by the state, the federal government, tobacco taxes, hospitals — and a 1% to 6% payroll tax on employers who don't offer health insurance.
The state Assembly approved the plan, which could go before a state Senate health committee next week.
•Colorado. A special commission has selected five proposed strategies for expanding health coverage. One would require all employers to offer workers insurance or pay a yearly fee of $347 per worker into a state fund. A final report to the state Legislature is expected by the end of January.
•Minnesota. Lawmakers have proposed bills that would impose fees on very large employers who don't spend 10% of payroll on health care.
•Michigan. A "fair share" bill similar to Minnesota's is pending in the Legislature.
•New York. Suffolk County lawmakers passed a law requiring very large employers to offer insurance or pay into a fund. A retail association sued, and a lower court rejected the law in July. The county did not appeal.
Spotlight on San Francisco
"Universal health care has never happened in America. It will happen here — first," San Francisco Mayor Gavin Newsom said last week in his inaugural address.
The city provides access to public clinics and doctors for residents who enroll in the program. Depending on their income, they pay little or nothing for care.
The program is open to uninsured San Francisco residents who earn up to 300% of the federal poverty level — roughly $30,600 a year for a single person. About 8,200 of the city's estimated 73,000 uninsured adults have enrolled since the program began in July.
San Francisco requires business owners with 20 or more workers to spend $1.17 or $1.76 hourly per worker on medical care, depending on the business' size. The law does not require employers to offer insurance, although that is one of four options. The other three are: reimbursing workers for medical costs, paying into workers' health savings accounts or paying the city. Money from employers — an estimated $2 million this year — would help cover the uninsured.
At issue in the restaurant association's lawsuit is a 1974 federal law, the Employee Retirement Income and Security Act. It bars states from requiring employers to offer health insurance or regulating the benefits they do offer to protect companies from varying laws. Congress gave only one state, Hawaii, an exemption from the law in 1975. It is the only state that requires employers to provide health insurance.
Last week, a three-judge panel of the 9th U.S. Circuit Court of Appeals said business owners such as Scherotter will have to comply with the law, at least until the full court can review the lawsuit later this year. A lower court sided with business owners.
"We believe once the 9th Circuit reads the entire case and spends as much time as the trial judge spent on it, that they will rule in our favor," Scherotter says.
Meanwhile, the city is moving forward with its first-in-the-nation effort.
"We know there will be bumps in the road ahead," Newsom said in his speech. "We've already had to fight a lawsuit. But we will not stop until every San Franciscan has access to quality, affordable, comprehensive health care."