Health insurance
07 05 08 - 13:18
Mandatory coverage law costing consumers
WEDNESDAY, MAY 7, 2008
In seeking solutions to the national problem of uninsured Americans, some communities and states are forcing employers to pay for health insurance or pay the government to do so. Where such a law has taken effect, employers are finding creative ways to pass the costs on to their customers.
A San Francisco law requires businesses with more than 20 employees to spend a minimum amount on health care for those who work more than 10 hours a week to provide care for an estimated 73,000 uninsured residents. It amounts to $1.17 per hour for businesses with 20 to 99 employees and an hourly cost of $1.76 for those with more than 100 workers, according to the Wall Street Journal.
A legal staffing firm, Kearney Boyle & Associates, tacks the $1.17 hourly cost onto clients' bills as a "San Francisco health ordinance fee." Diners at the Steps of Rome Caffe pay a 5 percent surcharge on their bills accompanied by a flier about the city's 2006 law.
The restaurant Tres Agaves on its menu tells customers that a "3.5 percent surcharge will be added to all checks for San Francisco affordable health care legislation." The restaurant sets aside $5,000 a week or about one-third of its operating profits to pay coverage for 85 workers who did not have insurance.
Some employers are complying by paying into the city's program; but aside from the immediate cost it is having other ramifications and deterring at least one business from expanding. With 95 employees, Cole Hardware meets the law for midsize businesses. But it is taking care not to exceed the 99 employees, which would put it into the costlier large-business category.
Besides paying for insurance or contributing to the city's health services program, employers also have the option of reimbursing employees' medical expenses.
The San Francisco law was overturned in a federal district court but is on appeal. Similar laws in Maryland and in Suffolk County have been overturned by the court. Massachusetts also has a law mandating health insurance for its residents. San Francisco's experiment has met with some success, but other municipalities weighing such laws have to be cognizant of the law's impact, not just for the uninsured but employers and all of society paying the tab.