Organized Labor

City's Historic Health Care Program to Continue Pending Legal Battle

Expansion of the city's Healthy San Francisco Program was stalled last month when U.S. District Judge Jeffrey White ruled on Dec. 26 that employers could not be mandated to fund the program.

White wrote in a summary judgment that the city's requirements "interfere with preserving employer autonomy over whether and how to provide employee health coverage and ensuring uniform national regulation of such coverage."

The Golden Gate Restaurant Association had sued the city in November 2006 to stop the program because of the requirement that employers provide health insurance or pay into a fund to insure the uninsured.

However, a three-judge panel of the Ninth U.S. Circuit Court of Appeals is reviewing San Francisco's appeal of White's ruling, and the court issued a stay on Jan. 9, allowing expansion of the program to proceed.

The San Francisco Central Labor Council, Service Employees International Union (SEIU) Local 1021, SEIU United Healthcare Workers-West, and UNITE-HERE! Local 2 were granted the right to intervene as defendants in April 2007.

The Healthy San Francisco Program (formerly called the Health Access Program) was authored by Supervisor Tom Ammiano and passed by the Board of Supervisors in July 2006, with strong support from labor.

The program to offer uninsured San Francisco residents access to comprehensive medical services enrolled over 7,000 individuals in the first six months of the program starting in July 2007. The first phase of enrollment limited eligibility to individuals making less than the federal poverty level of $10,210 a year. The city had planned to expand enrollment Jan. 3 to those making three times the poverty level, which would cover about 47,000 San Franciscans.

The program is the first of its kind in the nation, and provides care at a network of hospitals and clinics for uninsured adults who are not covered by Medi-Cal or Medicare. The $200 million annual cost of providing health care to the uninsured is funded by a mix of state and local taxes, patient payments based on income, and contributions by employers who don't offer insurance. The state awarded San Francisco $73.1 million in funding from the State Department of Health Services to implement the program over a three-year period.

The employer funding mandate is essential to the success of expanding the program to cover all the city's residents who currently lack health care coverage, said Supervisor Ammiano.

"We have funding to cover the lowest paid workers but to cover those who make up to 300 percent of the poverty level, we need the employer mandate," he said. The Health Care Security Ordinance sets a minimum spending requirement that medium-sized and large businesses must spend on each employee's health care. Private employers with at least 20 employees, and nonprofits with at least 50, would be required to provide health coverage at levels set by the city or pay a fee to the to cover the costs of care for their uninsured workers.

The GGRA argued that the mandate conflicted with a 1974 federal law prohibiting state and local governments from regulating employee benefit plans. Judge White agreed with the GGRA in his ruling.

Ammiano said that the city had appealed White's ruling immediately.

"He issued a ruling that is confusing and contradictory," said Ammiano. "The three judges of the Ninth Circuit Court really chastised [Judge White] and showed his ruling had no merit, so we're hopeful it will be overturned." He pointed out that White is a Bush appointee.

"It's distressing that a small group of wealthy restaurant owners are resisting providing health care for their lowest paid workers," Ammiano said. He added that since the December court ruling, many people are confused about whether they can enroll in the program. "It's unfortunate that the GGRA has tried to poison the process and confuse people about the program."

San Francisco Labor Council executive director Tim Paulson also criticized the small group of restaurant owners standing in the way of the will of San Franciscans." The health care legislation was passed unanimously by the Board of Supervisors and signed into law by the Mayor with a huge amount of public support." Along with the Labor Council, major community groups including ACORN, Bay Area Organizing Committee, Senior Action Network, Healthcare for All, and Young Workers United worked to get the ordinance enacted.

"San Francisco is a city that stands for more health care, not less," said Paulson. "The San Francisco Labor Council is proud that the city is challenging this regressive ruling by appealing to the Ninth Circuit Court."

Mayor Newsom issued a statement Dec. 26 after the ruling by Judge White in which he affirmed the city's commitment to providing health care. "Despite today's ruling, we are undeterred. We will move forward with this innovative program. We are working with the City Attorney to appeal the ruling, and we will win. Until we know the outcome of the appeal, the employer spending requirement will not go into effect as scheduled; and even though fewer people will be enrolled in Healthy San Francisco pending the appeal, the program will continue with its planned expansion on Jan. 2, 2008."

The San Francisco Chronicle pointed out that Judge White's ruling could have an impact on efforts to enact health care legislation at the state level: "The legal challenge could determine the authority of local and state governments to require employers to help pay for health coverage in the absence of a national health care law. In particular, a state insurance plan approved by the Assembly last month, and backed by Gov. Arnold Schwarzenegger, depends in part on an employer fee that would require state voter approval."

Deputy City Attorney Vince Chhabria said that by giving employers the choice of providing health coverage or paying to support city-provided care, the city was in compliance with previous court rulings that allow state and local governments to regulate employee benefits. In questioning Judge White's opinion, Ninth Circuit Judge William Fletcher told attorneys for the GGRA that, "There's a different minimum wage law in San Francisco. You have to pay that, too. Tough luck."

Ammiano said he was hopeful that the Court would allow the city to continue expanding the program during the appeals process, which could take another month or more.