Herrera seeks emergency stay
to reinstate health care ordinance

By Julia Cheever

December 28, 2007

The city of San Francisco filed an emergency bid with a federal appeals court Thursday for a stay of a ruling that struck down an employer spending mandate in the city's pioneering health care plan.

The emergency motion asks the 9th U.S. Circuit Court of Appeals in San Francisco to act by Monday because the financial mandate was due to take effect Wednesday.

City Attorney Dennis Herrera wrote, "Without this stay, tens of thousands of San Francisco residents and workers will be deprived of critically necessary health care services for uninsured people."

The stay, if granted, would reinstate the spending mandate and remain in effect while the city appeals Wednesday's ruling by U.S. District Judge Jeffrey White in a lawsuit filed by the Golden Gate Restaurant Association.

White agreed with the association's argument that the funding mandate conflicts with a federal law, the Employee Retirement Income Security Act, which regulates employee benefit plans.

Herrera argued in the motion that the city plan doesn't conflict with the law because it doesn't require businesses to participate in a federally regulated program. Instead, the San Francisco ordinance gives businesses the choice of either funding an ERISA-regulated plan or making payments to the city.

Herrera wrote, "It is entirely up to the employer to decide how to comply with this spending requirement."

Association executive Kevin Westlye said, "We intend to oppose the motion for the stay."

Westlye said the restaurant group opposes only the employer spending mandate and that nothing in the San Francisco ordinance prevents the city from expanding its health care program with government funding.

The city's groundbreaking Healthy San Francisco program, enacted last year, would provide medical care for approximately 73,000 uninsured adult residents who do not qualify for other government programs such as Medi-Cal.

The program would be paid for with a combination of city, state and federal funding and contributions from employers. Those enrolled would also pay quarterly participation fees on a sliding scale.

Under the mandate struck down by White, businesses with 20 or more workers would have contributed a set amount per worker, through either their own health plan or payments to the city. The amount was $1.17 per hour per worker for businesses with 20 to 99 workers and $1.76 per hour for companies with staffs of more than 100.

Healthy San Francisco director Tangerine Brigham said the plan has thus far enrolled 7,352 uninsured people on a limited scale and is due to begin expanding on a phased basis Wednesday.

She said that without the employer contributions, the program will limit enrollment to people with incomes of less than three times the federal poverty level of $32,000.

That limit would result in coverage of about 47,000 people within two years but would leave another 26,000 without coverage, she said.

Brigham said, "We're disappointed with the court ruling but we're expanding the program. We have been able to demonstrate the need for organized health care. People want it and are enrolling in the program."

Brigham said the number of uninsured people in the city was estimated last year at 82,000, but a recent state survey updated the current number to 73,000.

Herrera said in the brief that about 90 percent of city businesses with 20 or more employees already provide health care plans, but about 20,000 workers have either no coverage or less than would be provided under the city program.

He wrote that the spending mandate was "more sensible and more just" than a simple health care tax on all employers because the formula gives businesses credit for existing medical programs and avoids giving them an incentive to drop those programs.

If the appeals court does not grant an emergency stay, the city asks it to schedule an expedited appeal process, with all briefs due by April and a hearing in May or June.

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