A Federal Court Judge in our beloved 9th Circuit has ruled that the San Francisco Health Care Security Ordinance is in direct conflict with a 1974 law that prohibits governments from regulating employee benefits, meaning that the city can no longer charge employer based fees toward the health care plan. The San Francisco City Attorney and a group of labor unions are seeking an emergency stay so that the scheduled January 2nd implementation can go forward with the disputed employer fees.
“Without this stay, tens of thousands of San Francisco residents and workers will be deprived of critically necessary health care services,” Deputy City Attorney Vince Chhabria said in papers filed with the court.
He said Wednesday’s ruling by U.S. District Judge Jeffrey White, which found that the city was intruding into federal regulation of employee benefits, contradicted past decisions by the appeals court and the U.S. Supreme Court in similar cases.
The city’s health benefits ordinance, passed in 2006, was the first of its kind in the nation and was widely viewed as a model for local and state expansion of health coverage in the absence of national legislation. White’s ruling, if upheld on appeal, could pose an obstacle to a state health insurance plan that won state Assembly passage this month with the support of Gov. Arnold Schwarzenegger. It would be partly funded by an employer fee, which would require approval by the state’s voters.
As written, San Francisco’s ordinance would require private employers with at least 20 employees, and nonprofits with at least 50 employees, to provide health coverage at certain minimum levels or to pay a fee to the city. The fee would pay part of the cost of a $200 million-a-year program of care for the 73,000 uninsured adult city residents.
Again, this is one of those things where as an HR person, I should be glad about this ruling as it was confusing and put a great deal of responsibility on employers to understand how to implement the program without running afoul of the law.
But as a human being, I’m sad. There are so many people who go without health care in this country. But as I stated in a previous post, perhaps the city painted the issue with too broad a brush and left itself open to challenges like this.
I do, however, find it interesting that the challenge originated with restaurant owners. You already know how I feel about that.
Either way, it fills me with pride to know that my city is doing something to mitigate the circumstances of the less fortunate. I hope they get it right someday.
UPDATE: The program has been put on hold and San Francisco employers are “off the hook, at least for now”. A decision will be phoned in later this week.
UPDATE: Looks like it’s back in business according to the 3 member panel of the Ninth Circuit Court of Appeals. The vote was 3-0 in favor of the plan.
UPDATE 2: Here’s an EXCELLENT article on the subject from Nixon Peabody LLP.