Funding plan worker health care access falls hardest on small businesses, City Controller reports

Neutral impact on overall economy

June 24, 2006

San Francisco businesses with 20 to 99 employees would be impacted most by the proposed Worker Health Care Security Act, City Controller Ed Harrington reported yesterday.

"If implemented, this ordinance will have benefits and costs both of which could grow significantly over time," concluded Harrington's Economic Impact Report.

"While overall the ordinance appears to be economically beneficial, some employers will be adversely impacted (and may even close) and some people that work for firms that cannot afford coverage will lose their jobs," continued the report conclusion.

"Our economic impact analysis projects that an estimated 14,070 to 19,570 people could gain increased access to health care benefits at an estimated projected cost of $30.9 to $49.0 million in the first year of coverage.

"These costs will be immediately felt by employers and predominantly by smaller employers with less than 50 employees, as they currently are less likely to offer health benefits to their employees.

"Over time, however, we project that employees will ultimately pay a portion if not all of the cost of these new benefits through otherwise lower wage increases, as employers operating in a competitive marketplace have only so much resource capacity to pay toward personnel compensation costs (including both wages and fringe benefits).

"In the short-run, we project that for some businesses the increased cost of doing business in San Francisco will be greater than is supportable through price increases or existing profit margins, resulting in estimated losses of between 60 and 590 jobs. On the other hand, between 150 to 240 healthcare jobs could be created if all costs represent increased consumption of health services within San Francisco."

For complete report, click here.

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