Join the Frisco brigade for children's health care...
Thursday, November 05, 2009
One of the activist events rippling across the country is coming to San Francisco on Sunday -- and Champions for Children's Health is calling on people to participate to send a strong message to Congressional leaders that, when all is said and done in Washington, children should have equitable, accessible, affordable health care.
The event is the Champions for Children's Health Stroller Brigade, and participants will be pushing strollers en masse to demonstrate the need for kids' coverage. Supporters without strollers are welcome, too.
Folks should gather at San Francisco City Hall at 2 p.m. Sunday, November 8, to join in the brigade, which the Children's Defense Fund is organizing to send a strong message to Speaker Nancy Pelosi, Senator Barbara Boxer and Senator Diane Feinstein.
The message? Children need their leadership to ensure they are better off after health care reform is done.
TWO burning questions are at the center of America’s health care debate. First, should employers be required to pay for their employees’ health insurance? And second, should there be a “public option” that competes with private insurance?
Answers might be found in San Francisco, where ambitious health care legislation went into effect early last year...
The early results are in. Today, almost all residents in the city have affordable access to a comprehensive health care delivery system through the Healthy San Francisco program...
Although not formally insurance, the program is tantamount to a public option of comprehensive health insurance, with the caveat that services are covered only in the city of San Francisco. Enrollees with incomes under 300 percent of the federal poverty level have heavily subsidized access, and those with higher incomes may buy into the public program at rates substantially lower than what they would pay for an individual policy in the private-insurance market.
To pay for this, San Francisco put into effect an employer-health-spending requirement, akin to the “pay or play” employer insurance mandates being considered in Congress. Businesses with 100 or more employees must spend $1.85 an hour toward health care for each employee. Businesses with 20 to 99 employees pay $1.23 an hour, and businesses with 19 or fewer employees are exempt. These are much higher spending levels than mandated in Massachusetts, and more stringent than any of the plans currently under consideration in Congress. Businesses can meet the requirement by paying for private insurance, by paying into medical-reimbursement accounts or by paying into the city’s Healthy San Francisco public option.
There has been great demand for this plan. Thus far, around 45,000 adults have enrolled, compared to an estimated 60,000 who were previously uninsured. Among covered businesses, roughly 20 percent have chosen to use the city’s public option for at least some of their employees. But interestingly, in a recent survey of the city’s businesses, very few (less than 5 percent) of the employers who chose the public option are thinking about dropping existing (private market) insurance coverage. The public option has been used largely to cover previously uninsured workers and to supplement private-coverage options.
Through our experience working on health-care-reform efforts in California and Washington (one of us worked for President George W. Bush’s Council of Economic Advisers), we have seen how concern over employer costs can be a sticking point in the health care debate, even in the absence of persuasive evidence that increased costs would seriously harm businesses. San Francisco’s example should put some of those fears to rest. Many businesses there had to raise their health spending substantially to meet the new requirements, but so far the plan has not hurt jobs.
As of December 2008, there was no indication that San Francisco’s employment grew more slowly after the enactment of the employer-spending requirement than did employment in surrounding areas in San Mateo and Alameda counties. If anything, employment trends were slightly better in San Francisco. This is true whether you consider overall employment or employment in sectors most affected by the employer mandate, like retail businesses and restaurants...
The San Francisco experiment has demonstrated that requiring a shared-responsibility model — in which employers pay to help achieve universal coverage — has not led to the kind of job losses many fear. The public option has also passed the market test, while not crowding out private options. The positive changes in San Francisco provide a glimpse of what the future might look like if Washington passes substantial health reform this year.
We need to ensure that the California delegation takes these lessons from San Francisco back into the debate in DC.
Justice Anthony Kennedy today denied the motion by the Golden Gate Restaurant Association to prevent the ongoing implementation of the Healthy San Francisco program--including the minimum employer contribution. This is after the Ninth Circuit Court of Appeals upheld the program earlier this year.
As the City, as well as unions and others that objected to the restaurants' request for a stay, said in their filing: "... the City's program has become fully operational, the medium and large employers covered by the ordinance have been complying with the spending requirement for 15 months, and tens of thousands of previously-uninsured workers now have health coverage under the City's program. There is no basis for disturbing this status quo while the normal certiorari process runs its course."
The next step is to see if the Supreme Court take the case...
Restaurant owners--the biggest opponents to Healthy San Francisco--made broad predictions about the universal health care reform's impact to the city. Now, after over a year of implementation, many of those owners are accepting the change, in more ways than one.
The Golden Gate Restaurant Association proclaimed all sorts of dire impacts in the employer contribution requirement was passed, and has pursued legal action against the law, even though they have been rejected by the full 9th Circuit Court of Appeals. They are continuing to appeal to the U.S. Supreme Court, although it seems the restaurant community has just taken the changes in stride, as reported by Heather Knight at the San Francisco Chronicle
At the bustling French bistro Zazie in San Francisco's Cole Valley, one dollar goes a long way. That's how much owner Jennifer Piallat charges each customer to pay for health care for her 32 employees.
The dollars add up to about $11,000 a month - enough to provide Kaiser Permanente medical insurance, dental insurance and a 4 percent employer match on 401(k) retirement accounts. She said only 1 percent of her customers have complained about the surcharge. "And they were the 1 percent we didn't want to come back anyway," she said.
The Zazie experience is playing out at restaurants around the city, as most owners pass along the costs of city-mandated health care coverage to their customers - and say they're delighted to finally be able to afford it. Most customers say they're OK with paying extra.
But if it's all going down as smoothly as a glass of Cabernet after a long day at work, why is the Golden Gate Restaurant Association asking the U.S. Supreme Court to overturn the employer spending mandate - even asking Wednesday for an emergency injunction to block the program?
Why indeed? The sponsor of the bill, now-Assemblyman Tom Ammiano, is baffled. One theory is that even though it is going fine on the ground, national ideological interests are weighing in:
Deputy City Attorney Vince Chhabria said national groups could be pressuring the restaurant association to persevere in its case it to nip the issue in the bud before it expands elsewhere.
Otherwise, he said he's mystified because restaurants profess to support the program. He has collected several cards handed out by restaurants explaining their surcharge for health coverage, almost all saying they're proud to support this landmark program.
SF Supervisor Campos wrote the restaurants, asking them to drop the lawsuit:
"That restaurants make supportive statements about Healthy San Francisco, while simultaneously fighting in court to undermine this very program, raises questions about whether they are dealing with their customers in good faith," he wrote.
Campos also implies in the letter that the varying surcharges raises questions about whether some restaurants are spending all the extra money on health care. Piallat, the owner of Zazie, said her experience of having money left over after charging $1 a customer tells her that restaurants with 4 and 5 percent fees are profiting.
"I think a lot of people are making money off of this deal," she said. "Do the math." Other restaurant owners interviewed by The Chronicle said that's not true, especially as the recession means diners are spending less overall.
Piallat dropped her membership with the restaurant association after it asked members to contribute money to fund the lawsuit. She said that even if the association ultimately wins at the Supreme Court, she'll keep the $1 surcharge on her menu.
"I plan to still keep the buck," she said. "I'll change the wording to say, 'A dollar per person provides full benefits to our staff. Thank you so much.' "
There is always the suspicion that some businesses might be using the opportunity of the law to pocket some change, but the question is whether they provide benefits. Piallat's commitment to benefits is appreciated, but without the law, she might be undermined. The reason setting a minimum employer contribution is so essential is that those who want to provide coverage have to compete with those that don't provide coverage. That's why we feel it's important to set a floor--whether a minimum wage, or a contribution to health care.
The key takeaway: health reform, including a meaningful employer contribution, has been implemented in San Francisco, and the dire predictions of opponents have yet to materialize. Meanwhile, more people are getting access to care, and there's more stability for the health care system that all San Franciscans depend on. Some restaurants are charging a buck more, but many feel that's change they can believe in.
Those who followed health reform in 2007 recognized that any legislative proposal has three proving grounds: not just an executive, but both houses of the legislature. While much has been written about the U.S. Senate, both as an obstacle (60 votes!), and as a leader in shaping policy with Sens. Baucus and Kennedy, some new articles give some insight into the other arenas:
The powerful chairmen and subcommittee chairs of the House of Representatives--mostly Californians like Waxman, Miller, Stark, etc.--are working together to produce one health reform bill from the House, according to Robert Pear at the New York Times. As reported also by Ezra Klein at The American Prospect, and overheard at the White House Forum on health reform, there is some common framework, including "shared responsibility," including that of individuals and employers, as well as a choice of public or private plans. There's lots of details in how that would be crafted, but it's a start.
Also Jonathan Cohn at The New Republic does some reporting about the internal conversations in the White House that led the Administration to continue to emphasize health reform as a top priority this year, and to set aside real money to invest in it. The short answer is that the commitment keeps coming back to the President himself, who continually reasserts his interest despite concerns from his advisors.
Finally, the action isn't just in DC, as outside forces impact the federal conversation. There's my article at The New Republic's The Treatment about the real prospects of Healthy San Francisco helping spur reform not just in other states, but at the national level.
With the good news about the court case regarding Healthy San Francisco, I was reminded that Mayor Gavin Newsom did his State of the City address this year by YouTube, and had a 45-minute segment focused on health care. In the first 14 minutes, he gives his perspective about Healthy San Francisco, which is becoming the focal point of health services in the city by the Bay.
Mayor Newsom focuses on certain aspects of the San Francisco plan, which are central to his perpective running a city and county; while there may be other aspects that are more relevant to the national health reform debate, such as aggressive enrollment efforts, employer responsibility, or investment in safety net institutions. Either way, there's a lots to learn.
At the Assembly Health Committee hearing, Tangerine Brigham, the director of Healthy San Francisco, did indicate that other localities were looking at it. In fact, Howard County in Maryland has replicated the "access plan" aspect that connects patients to the local safety net, in an effort called, somewhat humorously, the Healthy Howard plan.
The court upheld the Healthy San Francisco program, particularly the requirement for set a minimum contribution by employers toward their worker's health coverage. The program allows employers to meet that requirement by offering private coverage, or by paying into a new, affordable public health plan option that would provide access to San Francisco health services.
This is big news for the city, and for the tens of thousands of San Franciscans who get coerage through Healthy San Francisco, or who have gotten or kept private coverage due to the law.
But this is even bigger news for the states. For years, many have said that states can't do health reform because of the federal ERISA law, which preempts state regulation of worker benefits. But this decision shows what a state can do without violating the constraints of ERISA.
Whether it was AB x1 1 in 2007, SB2 in 2003, or other health reform proposals in California, the possibility is there. Coincidentally, the Assembly Health Committee, chaired by Assemblyman Dave Jones, is having a hearing this afternoon about how to move ahead with state health reform. They have new possibility today.
Judging from some surprised E-mails that I have received, there are some needed corrections and clarifications to Dan Walters' recent Sacramento Bee column on health care policies and politics. He mentions "health-access advocates" but has never called anyone at our organization, so perhaps he's reporting third- or fourth-hand.
The biggest misrepresentation is his declaration of an "unspoken consensus is to wait to see what Congress and the next president, whoever he may be, can devise before taking up the Sacramento battle again with a new governor."
It's unspoken because it's untrue. There's lots of conversations about how to proceed at the state level, through bills, budget efforts, or ballot measures, and how to integrate state and federal efforts for reform. The political and policy landscape is changing, and we all need to adapt to it, but the planning is actively going on: the notion that any health stakeholders are in a "wait and see" is simply wrong.
Walters has been wrong before, having written several articles hostile to health reform over the last few years, much of the time declaring that that any health reform was doomed to be pre-empted by the federal ERISA law. He has stated that these reform proposals that included a required employer contribution to health coverage "illegal," that a previous court decision on ERISA was "a potentially fatal blow," and that elected leaders attempting reform were "in denial."
Yet last week, the Ninth Circuit Court of Appeals upheld the Healthy San Francisco plan which included just such a employer contribution component. This was predicted by many health reform supporters, but never fully acknowledged as a possibility by Walters in his reporting, until this article. And he characterizes the unanimous decision as "seemingly daring the Supreme Court to take up health care," rather than just ruling on the merits of the case. He doesn't acknowledge that the Supreme Court already had a chance to weigh in regarding an injunction of the SF law, and Justice Anthony Kennedy declined.
There's a lot of avenues to pursue health reform, at the local level, state, and federal level, and through various venues and strategies. But it's not an either/or proposition.
In the long run, this court decision trumps all the unfortunate vetoes made in the past week in importance, in terms of the boost that the decision provides to state health reform around the country. It was a tough week here in California, but the court decisions makes it easier to do reform in Sacramento and around the country, and that's a positive outcome amidst the negativity. So the issue for state health reform refocuses on being able to pass a proposal, rather than to defend it in court.
Why the ERISA Ruling in San Francisco is a Big Deal
Thursday, October 02, 2008
The ruling on the San Francisco health care ordinance is important for several reasons: first, it clearly dismisses the arguments of the fast food industry and the Chamber of Commerce that the employer requirement violates ERISA.
Second, the ruling takes head on the decision by the Second Circuit Court on Maryland (known as RILA after the Retail Industry Leaders Association that filed that case). The Ninth Circuit says that the other court demonstrated that Wal-Mart was the only employer required to change their behavior as a result of that law and that the Maryland law did not give Wal-Mart (or any employer) a genuine alternative for providing health benefits for workers. In contrast, the San Francisco health plan is a real alternative for employers (and their employees). An employer that is not meeting the requirements of the SF ordinance can choose to provide health benefits to more employees—or they can keep doing what they were doing and pay into the City plan which their uninsured employees can access. What is critical here is that the City plan, the Healthy San Francisco Plan, provides a real choice by offering health care for low and moderate income San Franciscans, including basic services such as physician and hospital care with only modest out of pocket costs.
Third, the San Francisco ordinance is a per-worker per-hour obligation (now $1.17 per hour or $1.76 per hour, depending on employer size and non-profit or for-profit tax status). This means that the San Francisco ordinance creates the equivalent of a minimum wage for health benefits: employers must spend a specified minimum on health benefits for each worker. (There are of course some exemptions and caveats, as there are for the minimum wage.) It is no surprise that the same elements in the business community that routinely oppose minimum wage increases and living wage ordinances have led the fights, both political and legal, against an obligation for employers to contribute to health benefits.
Yet economic research has demonstrated that moderate increases in the minimum wage actually stimulate the economy because low wage workers spend what they make: indeed the original micro-economic case study by Card and Krueger found that employment in fast food restaurants increased, apparently because low wage workers and their families were able to spend more at fast food restaurants! The same thing applies to health benefits: providing low and moderate income working families affordable health benefits with reasonable out of pocket costs gives those families more disposable income to spend on other things—though as health people, we recommend more fruits and vegetables rather than fast food!
Over the last several years, the UC Berkeley Labor Center has done several research pieces that estimate the impact on businesses and the economy of various reform proposals: these have consistently found that a thoughtfully designed employer obligation is not a job killer. Instead, in analyzing AB8 (Nunez/Perata) and the Governor’s proposal, in July, 2007, Jacobs et al found a net positive economic impact. More on this to follow.
The United States Court of Appeal for the Ninth Circuit ruled today for the City and County of San Francisco, and against the Golden Gate Restaurant Association, which had sued to block the new Healthy San Francisco program, and particularly, the employer contribution provisions.
According to Judges Alfred T. Goodwin, Stephen Reinhardt, and William A. Fletcher: "We hold that ERISA does not preempt the Ordinance."
Many opponents of health reform, including SB2, Prop 72, SB840, AB8, AB x1 1, and other efforts, have cited the ERISA bogeyman. This decision is the highest and most affirmative ruling yet that there are ways for states and localities to address health reform, including employer-based coverage, without being preempted by the federal ERISA law.
Once again, California leads the way. More to come!
Healthy San Francisco gets the full treatment in a paper by Community Catalyst. "Healthy San Francisco: A Case Study of City-Level Health Reform" is a description of the politics and policy of the groundbreaking effort, written for health advocates in other states and nationally to learn lessons and take inspiration for their efforts.
Even in tough week, we see that California can lead the way. It's up to us not to give up...
It's was a sunny, optimistic day in San Francisco, as Mayor Gavin Newsom addresses the crowd on the steps of his City Hall, at the one of the over 50 launch events for the Health Care for America Now! campaign for federal health reform. "We've been here on these steps many times before, saying many of the same things. But this time feels just a little bit different. This time it feels like we share a feeling of a little more optimism." said Newsom.
"This is not just an ethical issue, though it is. This is not just a moral issue, though it is. This is an economic issue," the Mayor said. On the stalled effort in Sacramento, he said "we were that close. We were right there on the cusp on fundamental change. We know what needs to be done. Its time for leadership to get the job done."
Giselle Quezada of ACORN and Anthony Wright of Health Access California moderated the event and are to the left of the Mayor in the picture. Also pictured are John Arensmeyer of Small Business Majority, Leah Donahey of CREDO Mobile, and Dr. Stuart Bussey of the Union of American Physicians and Dentists of AFSCME.
Other speakers included Art Pulaski of the AFL-CIO, Conny Ford of the San Francisco Labor Council, Dr. Rachel Krebs-Falk of the Committee of Interns and Residents, Paul Kumar of SEIU-United Healthcare Workers West, and Amy Moy of Planned Parenthood Golden Gate. We had 20 media outlets attend, including television, radio, newspapers, and magazines.
It was a successful start to an important campaign.
With the announcement of the Health Care for America Now! campaign to push for national reform with a new President and a new Congress at the beginning of 2009, some may wonder about California's role in this national effort.
First things first: this is no way supplants or suggests a lack of commitment to the ongoing, multiple-year effort for state-based reform. That effort is ongoing, and will be highly coordinated with this new federal effort. We think there is an opportunities for health reform at both the state and federal levels in 2009. We simply think the federal government should be a partner and a leader for health reform, rather than an obstacle, which has been its position for several years.
More than that, California can and should be a leader in influencing the national debate. And it is well equipped to do so. The two locations for launch events tell the tale:
* No state feels more urgency for health reform than California. One of our events is in front of Los Angeles County Hospital spotlighted the city as “ground zero” for the health care crisis nationally, with closing emergency rooms and one of the highest rates of uninsured in the nation. Nobody needs health reform more than Californians facing a broken health system.
* No state will have a bigger voice in the debate, given our sizable and powerful Congressional delegation, led by the Speaker of the House, Nancy Pelosi, and key committee chairmen like Reps. George Miller, Pete Stark, Henry Waxman, and other leaders.
* No state has more experience considering and debating the various options for health reform over the last five years than California, at the state and even local level. Our event in front of City Hall in San Francisco spotlighted a city that not only hosts the leader of the U.S. House of Representatives, but that also shows health reform is possible—and meets many of the principles advanced by consumer advocates. The city last week just celebrated the one-year anniversary of the implementation of their universal healthcare program, Healthy San Francisco.
California has no choice but to be a leader in the national effort. And an important part of that is leading by example, by moving state-based reforms on a parallel track with the national conversation.
Later today, Health Access and many other key groups in California will help launch of a major campaign to win national health reform in 2009. The scale of the effort, called Health Care for America Now, is unprecedented ($40 mill, over 100 groups, over 100 organizers in 45 states) for comprehensive health care reform in 2009.
The California events in San Francisco and Los Angeles have their own star power, featuring SF Mayor Gavin Newsom and Lt. Gov. John Garamendi, both nationally-recognized leaders with significant health reform credentials, joining California Labor Federation leaders Art Pulaski and Connie Leyva and leaders of key community, consumer, business, and health care groups.
We'll have more coverage later today and the week, reporting about the activities of this broad ranging coalition. Leading the field effort in California is Health Access California, California ACORN, and the California Partnership, in active partnership with many of the California groups participating in the launch events, including: the California Labor Federation, AFSCME, CREDO Mobile, MoveOn, California Teachers Association, Committee of Interns and Residents, Planned Parenthood Affiliates of California, SEIU, Small Business Majority, Universal Health Care Action Network, United Nurses Association of California, United Food and Commercial Workers, and others. More later...
My only question is: what were they thinking? To come to the state where their notoriety has only increased with the rescission issue, where a single-payer bill is moving in the Legislature, where policymakers of both parties want to place new rules over their behavior... it just seems masochistic.
It's a good opportunity to put the spotlight on the problems with insurance companies practices in general, and to voice support for single-payer health care (including SB840 and HR676) in specific. Especially if you are in the Bay Area, it's worth your lunch hour and afternoon.
Here's some previous posts on the background of the Healthy San Francisco effort, including the legal ERISA challenge to the San Francisco program, to strike down the policy of getting employers to contribute to the health care of their workers.
There's a hearing today at the Ninth Circuit Court of Appeals. Given that effort around Healthy San Francisco came about in part because of federal inaction on health reform, it's disappointing that the White House couldn't stay out of it, and allow state and local groups to proceed with their own reforms.
San Francisco Mayor Gavin Newsom visited with leaders of the state government in Sacramento today, and announced he was going to sue them. Their decisions are messing up his Healthy San Francisco program, which could provide access to health services to half the city's uninsured population by the end of the year -- granted it gets the money it needs.
Specifically, Newsom (or rather, his city) is seeking an injunction against the 10% reduction in reimbursement rates to providers who take care of Medi-Cal recipients. The yet-to-be-filed lawsuit is seeking a broad coalition of co-plaintiffs to stop the $544 million cut, which takes effect July 1, from going forward.
Newsom's legal action is a criticism of both Gov. Arnold Schwarzenegger and lawmakers -- bothDemocrat and Republican -- who are seeking to balance the state budget through a cuts-only strategy. The state is facing a $14.5 billion -- and growing state budget deficit. In February, the Legislature and Governor agreed to an approximately $1 billion package of midyear cuts, which included the Medi-Cal rate reduction.
The rate reduction is bad news for Medi-Cal recipients statewide, who already have a hard time finding doctors who'll take them. California ranks 42nd in the nation in provider reimbursement rates; primary care providers are paid between $18 to $24 for seeing patients.
In San Francisco, this rate cut translates to an $8.7 million loss to the city's public health department -- a figure that does not include the network of private practice physicians who also see -- or don't see -- Medi-Cal recipients.
"The impact is already being felt," and some physicians are refusing to take appointments from Medi-Cal patients, Newsom said. That means 123,000 Medi-Cal recipients in San Francisco are going to have a harder time getting health care, and they will suffer. Those who get really, really sick will end up in San Francisco General Hospital's emergency room, which will shift costs to other patients and in other ways to the local economy. It's a burden on everyone, it's unfair and that's what Newsom will argue in court.
I'm a little disappointed, though, that Newsom didn't come out more strongly in favor of a solution--one that includes revenues. He knows one of the problems is that we don't have enough money. The state has chosen to shuffle money hither and yon and enact budgets that slid out of balance the minute they were signed into law.
Given his experience in budgeting with massive deficits ($300 million in SF this year), he knows the need to increase revenues. He admitted that he has raised fees to the hilt and has run out of new fees to increase. Still, he stopped short of supporting higher taxes/fees/revenues, saying tepidly, "I don't believe in a tax-first strategy. But given the magnitude of the problem, it would be wrong not to have revenues on the table."
While taxes and revenues are the long-term solution, the Mayor's announcement is an important immediate tactic, to not take the cuts laying down. In San Francisco, Newsom is actively supporting his Healthy San Francisco program, which he says should be a model for the state. But, he said, "other health care programs will get cut. This money comes from somewhere. Finding a way to get it done will impact other programs in the city. there will be layoffs within the city as a consequence.'
It's nice that there is a high-profile ally who will shed light on budget cuts--he predicts that these cuts will have a big impact on San Francisco--a county that comparatively spends more on health care than others. If that's the impact in SF, how much worse will it be in the rest of the state?
Steve Wiegand of the Sacramento Bee brings us a fascinating blast from the past, explaining some of the details with Gov. Earl Warren's attempt at health care reform many decades ago. The question is whether the current Republican Governor's second attempt at health reform (he says he's committed) will be more successful...
Ground zero in health care reform (at least one of the 'zeros') is San Francisco, perhaps the largest political entity in this country to legislate universal coverage. Anthony Wright finds the most vocal opposition to Healthy San Francisco came not from insurers, or pharma, or physicians or neocons, but restaurants. From his desk, it looks like the restaurant's opposition may be backfiring, as some patrons are happy to pay a surcharge to cover their server's health benefits.
I've always said that given the raw numbers, Los Angeles was the ground zero in the uninsured crisis in the nation--so maybe it's appropriate California offer a ground zero in the solution--hopefully Sacramento will re-establish it's claim to that mantle as well.
Other interesting posts noted include: * a series on the state of America's health system by Tom Lynch (a four-part post: One, Two, Three and Four), trying to answer the question is our system is the best in the world... * a Colorado look at a proposal to allow out-of-state plans to offer coverage by Louise Norris--she notes all the problems with such a proposal in terms of undermining state consumer protections and markets; and while these consumer protections are national, I think there's a role for the states in insurance regulation; * and Jason Shifrin on a minimum benefits requirement for health insurance--an issue we are trying to tackle with SB1522 (Steinberg), which we believe strikes the right balance, allowing lots of choice and variation that is in the insurance market right now, but have some standardization to prevent the "junk" insurance plans that really don't provide even catatrophic coverage, and allow for apples-to-apples comparisons for consumers.
Quick. What special interest is the most active opponent against comprehensive health reform?
While many compete for that distinction (insurers, doctors, drug companies, etc.), there's a strong argument that it is... the restaurants.
As the industry perhaps most likely not to provide health coverage to their workers, they have consistently opposed efforts that would require them to contribute a fair share to health care.
* Many have been actively opposed to single-payer at least since the 1994 ballot measure--with some even subjecting patrons to anti-Prop 186 table cards.
* Fast food and chain restaurants were the single largest opponents of SB2 and Prop 72, which would have required large employers to pay for their worker's health care. In fact, fast food and chain restaurants--from McDonald's and KFC to Applebee's and Cheescake Factory--made up over 70% of the opposition fundraising to Prop 72--most of the rest of the employer community stayed on the sidelines. Without the California Restaurant Association, Prop 72-which lost by less than a percetnage point--would have been enacted.
* Despite Governor Schwarzenegger's urging, they ultimately opposed AB x1 1. In opposing an minimum contribution for employers to health care, they graciously offered to support a sales tax--a tax they don't pay, but that their customers and other businesses do.
* In San Francisco, the Golden Gate Restaurant Association--rather than the Chamber of Commerce or broader business interests--has led a lawsuit to overturn Healthy San Francisco. The lawsuit is still pending, although there have been encouraging signs from the Ninth Circuit Court of Appeals and even the Supreme Court (in the most underplayed story of the year).
The article indicates that dozens of SF restaurants are now placing notices on menus, announcing additional costs--from $1 to $2 dollar flat fees to 1-4% surcharges--to help pay for the new health care requirements.
But the tactic, clearly designed to stoke public opposition to the law, may backfire:
* Of all the things that your dollars, it would seem that San Franciscans might think that a few extra dollars to go to the effort for universal health care is a good thing.
* The beneficiaries of the health care law are not faceless. They are the waiters and waitresses that diners interact with. And even for the kitchen staff--wouldn't you want the people handling your food to have health insurance? Especially since there is a correlation between being insured and health status?
* It's clear that some of the traditional arguments against employer requirements don't apply to San Francisco restaurants--people aren't going to go across the Bay Bridge to get a burger, or a fine dinner, simply to avoid a small surcharge. Rather, the minimum requirement helps level of the playing field between a coffee place that does provide health benefits, and one down the street that doesn't.
* The article quotes at least one patron that didn't mind the surcharge. So, if the surcharge is truly passed on to consumers, this undermines the restaurant's argument that the requirement will put cuts into their profits or put them out of business. They can't have it both ways.
Any health coverage expansions--from employer mandates to single-payer to hybrid "shared responsibility" plans--are going to ask employers who don't cover their workers to contribute more than they do now. It's an issue not just of financing, but of fairness--to the many employers who cover all their workers. It's also a practical issue: without a minimum contribution, policymakers fear "crowd-out," where those employers currently offering coverage drop it so their workers take advantage of a public program expansion.
Fast food and chain restaurants will eventually have to be share in the solution, rather than spending their time raising money against reform, pursuing legal attacks, and even trying to make political points on menus. But it looks like that may be a longer wait than what's at the trendiest San Francisco restaurant.
Proponents and opponents of health reform point to the vast amounts of human suffering that will ensue should something not pass -- or pass. I have no doubt that both sides are correct, but I would point everyone to Pages 28-31 in the recent San Francisco decision, where the judges wrote eloquently about the "balance'' of hardships imposed various sectors under the Healthy San Francisco Program -- or lack thereof.
I'm going to summarize their words more bluntly, but you can read the more graceful version by clicking on either of the links posted above.
If Health San Francisco did NOT go forward:
Patients who just started treating their diseases would stop going to the doctor, stop taking drugs, and risk death or serious illness.
The city would incur costs -- as it does now -- because sick (and now, uninsured) patients would cram into the city clinics and public hospitals and the city would not have enough dollars from employers -- or other sources -- to help offset the costs for caring for the uninsured.
For the "public interest"... well.... wouldn't you want to know the person who is handling your food is healthy?
If Healthy San Francisco DOES go forward:
It would be a big administrative pain in the rear for businesses, and it'd cost them money because they'd actually have to provide health care for their workers.
This "Balance of Hardships" perfectly frames our remaining year(s) of health reform. Given those pros and cons, wouldn't you want health reform?
First thing's first -- if you want to see it for yourself, the Ninth Circuit's ruling to suspend the lower court Judge Jeffrey White's stay on the Healthy San Francisco Plan, click here.
The ruling is interesting in light of the work being done this year to reform health care and expand health coverage statewide -- in part -- through an employer mandate. In fact, when the ruling came down against the San Francisco plan right after Christmas, there was no shortage of Scrooges in the streets, praising the decision that would have left 26,000 middle-income San Franciscans uninsured.
(Background: Golden Gate Restaurant Association sued to prevent an employer-mandate piece of the Healthy San Francisco Plan from going into effect, saying the ordinance violated the federal ERISA law. ABX1 1, a measure that will be heard in the Senate Health Committee next week and has been agreed to by both the Speaker and Governor, contains an employer mandate as part of a package to extend coverage to more than 3 million uninsured Californians).
Reasons the Ninth Circuit ruled against the Restaurants and for the City:
The ordinance does not require businesses to adopt any specific kind of health plan, it merely sets a spending threshold that employers would have to meet, therefore, it does not violate ERISA. (ERISA was intended to assure that employers would not have to contend with a hodgepodge of different benefit laws etc in each and every city, county, state they operated. This has nothing to do with levels of expenditures)
If an employer does not meet the spending requirements, they pay money to the city -- again, with no reference to benefit structure of a health plan for which they will pay.
The ordinance doesn't require employers who already provide coverage to provide certain benefits (thereby altering their ERISA plans.)
Lastly, there is no additional burden to complying with the ordinance, as employers would be tracking this information anyway.
On top of the technical details, the court also found the hardships borne by San Francisco residents would be far greater than those borne by businesses. Approximately 20,000 San Francisco workers would be harmed, including "human suffering" -- contrasted with economic injuries.
While ABx1 1 is not exactly the same as the San Francisco ordinance, the arguments used by opponents against an employer mandate (which IS part of ABx1 1) are essentially the same. This ruling should put that hollering to rest -- until the next court ruling...
SF wins stay, employer contribution in effect, for now...
Wednesday, January 09, 2008
The Ninth Circuit Court of Appeals has ruled in favor of San Francisco, to grant a stay of the lower court decision to strike down the employer contribution of their Healthy San Francisco plan.
This means that San Francisco can begin implementing its Healthy San Francisco plan, including the employer contributions, while the case is fully heard and deliberated at the Ninth Court of Appeals. There's no guarantee that SF will win the final appeal (or appeals to the Supreme Court), but it send s a powerful signal. From the decisions:
In this case, we hold both that there is a “probability” — indeed, a “strong likelihood” — of success on the merits, and that “the balance of hardships tips sharply in . . . favor” of the City and the Intervenors. We further hold that the public interest supports granting a stay.
We're not done with this. The legal challenges for the San Francisco plan, and for state-based health reforms in general, are still ongoing. But this suggests there is a "strong likelihood" of defending local health reforms against these challenges.
Most of all, this is good news for the San Franciscans who can now get better access to care as a result.
Promising news from the ERISA lawsuit on the Healthy San Francisco plan at the Ninth Circuit Court of Appeals. Yesterday, a three-judge panel ini Pasadena heard arguments about whether it should stay the ruling and let San Francisco proceed with the employer contribution of its new health plan.
So while no rulings were made, on the stay or the substance of the ERISA challenge, it seemed the judges poked holes in the logic of the opponents of San Francisco's health reform. Bob Egelko at the San Francisco Chronicle has the intriguing write-up.
Court gives San Francisco health plan a boost Bob Egelko, Chronicle Staff Writer Friday, January 4, 2008 PASADENA--A federal appeals court boosted San Francisco's hopes Thursday of reviving its plan to extend health coverage to all uninsured residents and make employers share the cost.
Members of a three-judge panel of the Ninth U.S. Circuit Court of Appeals made it clear they thought U.S. District Judge Jeffrey White was on shaky ground last week when he struck down a key funding provision of the health program, which would require medium and large companies to offer insurance to their workers or pay a fee to the city.
Ruling in a lawsuit filed by the Golden Gate Restaurant Association, White said San Francisco was trying to require employers to provide a specific level of health benefits. That violates a 1974 law prohibiting state and local governments from regulating employee benefit plans, White said.
But San Francisco's lawyers argued - and the appeals court judges appeared to agree - that White had misread the law. The city says the law provides only that employers must spend a certain amount on health care, either in coverage for their workers or in payments to the city.
That's a crucial distinction under past U.S. Supreme Court rulings that have given states and cities some leeway to pass laws protecting their inhabitants' health and welfare, said Judge William Fletcher. If the city's interpretation of its law is correct, he said, "that takes away virtually all of Judge White's reasoning."
When Richard Rybicki, lawyer for the Golden Gate Restaurant Association, conceded that the city was reading its ordinance accurately, Fletcher said, "It seems to me your argument just disappears on you."
Rybicki argued that the San Francisco ordinance still intruded too deeply into employers' health care decision-making and would contradict Congress' goal of national uniformity in health plans. But Fletcher and the other two panel members, Judges Stephen Reinhardt and Alfred Goodwin, seemed skeptical.
The court gave mixed signals on whether it would grant the city's request for an emergency order suspending White's ruling and allowing the ordinance, including the employer fees, to be fully implemented during the appeal process.
But the judges' questions and comments during the one-hour hearing in Pasadena suggested that the court was prepared to interpret the 1974 federal law in a way that leaves room for universal, shared-cost health coverage at the state and local levels, in the absence of a national health care law....
For those who are supposedly so confident that any attempt at health reform will run afoul of ERISA (I'm looking at you, Chris Reed), this hearing should give pause that some judges who matter might not be so sure
There's no ruling to celebrate, and just like we said with Judge White's lower court decision, there's still a long way to go in the legal review of the San Francisco case, as well as statewide health reforms. But it's clear there's an opening, and the question is how big that opening is, and what is the right policy that is able to make it through.
A NEW YEAR BRINGS NEW EFFORTS AROUND HEALTH REFORM
Governor, Speaker file initiative language to accompany reform package
Lower court rules against employer contribution for Healthy San Francisco, although Appeals court sends promising signals
Senate Health Committee to hear AB x1 1 (Nunez) on January 16th
In a typical year, Sacramento stands still the week between Christmas and New Year. Not so, in 2007, especially regarding health care.
The last Health Access Update reported from the Capitol (December 17th to be exact), when Gov. Arnold Schwarzenegger, Assembly Speaker Fabian Nunez, and a broad and diverse number of supporters were at a celebratory press conference right after the passage of ABx1 1 (Nunez/Perata) out of the Assembly. (Senate Leader Don Perata chose not to immediately hear ABx1 1, waiting until after the break as analysts looked at fiscal forecasts for the measure.)
If ABx1 1 (Nunez) is passed along with its accompanying ballot measure – which was filed last week – it would represent the largest public program increase in more than 40 years and would require all California businesses to contribute toward their workers’ health care. (Read a more detailed analysis of ABx1 1 here, and about its passage here. Ongoing updates will be posted on the Health Access blog.)
Last Friday, the Governor and Speaker filed with the Attorney General the initiative that accompanies ABx1 1. As previously agreed upon, the initiative contains some of the financing of ABx1 1. The initiative includes four financing components:
$1.75 per pack tobacco tax;
Minimum employer contribution of 6.5% of payroll (if payroll exceeds $15 million); 6% (if payroll is between $1 million and $15 million); 4% (for payrolls between $250,000 and $1 million); and 1% (for payrolls below $250,000);
$1 billion from counties in return for the state assuming care of medically indigent patients;
Hospital provider fee of 4%, which would be used to bring down federal funds to help increase Medi-Cal rates and partially fund coverage expansion.
The money that the initiative raises largely goes to expand public programs for lower income Californians -- both children and adults -- to provide subsidies for moderate income families, and to raise Medi-Cal rates and to fund some public health and prevention efforts. It also sets a standard for employer contributions to health care for their workers.
The measure also includes a $25 million loan to finance children’s coverage from January 2009 through June 2009, allowing children to continue to be enrolled in county programs until statewide coverage takes effect. Without this provision, the counties would run out of money and would likely disenroll children from coverage.
The initiative also contains various door-stop/triggers to prevent the program from creating a fiscal threat to the general fund. First, the Director of Finance, twice a year, would look into the state’s special health account to determine if there is enough money to run the program. If not, then he tells the Governor and Legislature, giving lawmakers a chance to do something about it. If the Governor and Legislature fail to act, then the law is inoperative and the reforms revert to the current status quo, in an attempt to calm the fears of those who have questioned whether the program might create too much of a strain on an already strapped state budget.
The initiative will likely emerge from the Attorney General’s office with a Title and Summary and fiscal analysis in the next month. The measure then heads to the Secretary of State’s office, who will certify the initiative and start the (less than) 150-day clock for signature gathering efforts to place the initiative on the November ballot.
LITIGATION ON HEALTHY SAN FRANCISCO
Other news broke over the holidays with potential but uncertain impact on health reform. A Bush-appointed San Francisco Superior Court judge, Judge Jeffrey White, struck down a key provision in San Francisco ’s near universal health care plan, which required employers to either provide coverage to workers or pay a fee that would enable the city to provide medical services to employees.
The decision says the San Francisco law would violate the federal ERISA (Employee Retirement Income Security Act). The federal law, passed in 1974, was meant to assure that mulit-state businesses did not have to contend with a hodgepodge of rules about benefits for each city, county, state they operated in. The city of San Francisco has appealed the decision to the Ninth Circuit Court of Appeals, which heard initial arguments yesterday.
The ruling creates a problem for the implementation of the Healthy San Francisco program, which moved ahead with the rest of the proposal with a rollout on Tuesday, January 1. The court decision, if left to stand, would force San Francisco to limit enrollment, which means that 26,000 middle-income San Franciscans (out of the 82,000 uninsured residents) will not be able to benefit from health care. While a financial hit, the employer assessment was not the dominant part of the funding: Employers contributions were expected to pay for approximately 19% of the city’s program.
PROMISING HEARING YESTERDAY: A three-judge panel yesterday heard arguments about whether the employer contribution piece of the Healthy San Francisco Plan should continue while the lower court decision is appealed. As reported in the SF Chronicle today, the comments by all three judges suggest that the lower court ruling may be overturned, and that the federal ERISA law does allow room for states and localities to construct health reform for their citizens.
Meeting the requirements of both health reform and ERISA has been an issue for health reformers around the country. Since the beginning of this year’s health debate, advocates and the authors have consulted with experts – including lawyers who helped write ERISA –to help prepare for such a court case against the proposal.
UNKNOWN RULING IMPACT ON ABX1 1
There are some similarlies between the statewide reform proposal, and city's effort. But the San Francisco health plan and ABx1 1 are not mirror images, therefore, any ruling on the San Francisco proposal won't necessarily have an impact on ABx1 1.
But perhaps most importantly, is a suggestion which the lower court judge gave into how an ERISA-compliant reform could be structured.
From Judge White’s conclusion:
The Court is not convinced that other alternatives for creating a program for providing public health private employers into account in the form of tax credits. are are not viable. Defendants propose an increased general tax requirement, but state the unfairness of not taking existing health care expenditures into account. Without wading into the legislative dominion, the Court can envision such a tax program that takes existing health care expenditures by private employers into account in the form of tax credits.
White’s suggestion parallels language in the initiative that was filed by Gov. Schwarzenegger and Speaker Nunez:
19003 (a): On and after January 1, 2010, each employer shall pay a health care contribution equal to a percentage of wages paid to its employees during the calendar year. Each employer shall be eligible for a credit to offset the contribution by the amount that the employer expends for health expenditures for employees and their dependents during that same period.
It remains to be seen whether the SF health plan will advance or be impacted by the courts, but in absence of a definitive court ruling, many health advocates continue to seek to advance reform at the state and local level.
ABX1 1 IN SENATE JANUARY 16
As attorneys toil away in separate corners, the state Senate Health Committee is scheduled to hear AB x1 1 (Nunez) on January 16.
Senate Leader Don Perata, who has been supportive of health reform in the last year, has asked the Legislative Analysts' Office to perform an independent review of ABx1 1's impact on the state's general fund in light of the $14 billion budget deficit in the fiscal year.
The state Department of Finance has testified in hearings that the plan would have no impact on the state budget because it uses its own sources of revenue -- from employers, workers, the federal government, savings, providers and the tobacco tax -- to pay for itself and would shut itself off if it were found to have insufficient funds.
CALL TO ACTION: Submit letters about ABx1 1 (Nunez) to the Senate Health Committee by January 10th to be reflected in the committee analysis. Health Access will post our Support (if Amended) letter shortly.
Sen. Sheila Kuehl, Chair Senate Health Committee State Capitol Sacramento, CA 95814 FAX: 916.324.0384
Health Access will continue to provide updates on ABx1 1, the initiative and other health reform efforts, including late-breaking developments that will be posted on our blog, at: http://www,health-access.org/blogger.html
While Chris Reed of the San Diego Union-Tribune is so sure that the state health reform plan is going to be struck down because of ERISA, given the recent decision in San Francisco, the judge who made that decision isn't so sure. In fact, he proposes a structure similar to what the initiative filed last week proposes.
From Judge White’s conclusion in his opinion:
The Court is not convinced that other alternatives for creating a program for providing public health care are not viable. Defendants propose an increased general tax requirement, but state the unfairness of not taking existing health care expenditures into account. Without wading into the legislative dominion, the Court can envision such a tax program that takes existing health care expenditures by private employers into account in the form of tax credits.
From the initiative filed by Governor Schwarzenegger and Speaker Nunez:
19003 (a): On and after January 1, 2010, each employer shall pay a health care contribution equal to a percentage of wages paid to its employees during the calendar year. Each employer shall be eligible for a credit to offset the contribution by the amount that the employer expends for health expenditures for employees and their dependents during that same period.
There's no guarantees, but it seems that the initiative takes the judge advice--and let's remember this is one judge who takes a broad view of ERISA pre-emption.
In light of last week's San Francisco Superior Court ruling on the Healthy San Francisco plan, I think we should take take Michael Pollan's nonfiction hit The Omnivore's Dilemma a step further.
The Golden Gate Restaurant Association contested the portion of the Healthy San Francisco Plan which requires the city's employers with more than 50 workers to provide health coverage or pay an assessment to the city, which would then give employees access to the city's network of medical services. Healthy San Francisco aims to provide health coverage to the city's 82,000 uninsured residents. The GGRA won the first round, meaning that approximately 26,000 middle-income workers will remain uninsured -- and presumably many of those are also toiling over the range, serving up food, greeting guests and washing dishes.
The association's website claims it has more than 800 members. Clicking through, I'd say it included about 600 restaurants, including uniquely San Francisco gems like The Slanted Door, Green's and Citizen Cake and chain restaurants such as Hooters, Pasta Pomodoro and Il Fornaio.
The trend among the health conscious is knowing the origins of food: where it comes from, what impact its production had on the environment, whether it had to travel far to arrive at your table.
Let's make part of that "knowing,'' discovering whether the food is served by someone who has access to a doctor when they need it (and can afford it). And if it isn't? We have the ability to walk away.
What's the impact of the court ruling in San Francisco?
As the San Francisco Chronicle reports today, the immediate impact is that Healthy San Francisco will not be able to extend to it full potential, restricting access for 26,000 middle-income San Franciscans. That's the unforunate human impact of the decision. Whether it has a long-term impact on the financing of the rest of the program has yet to be seen, but it's a concern.
But maybe not for long. There's no guarantee of what will happen on appeal. As the Workplace Prof Blog sees it, "I expect an appeal to the Ninth Circuit where all bets are off and panel composition will be key."
As for state health reform? A ruling on one type of health reform is a ruling on... one type of health reform. What was proposed in San Francisco is different in detail, structure, and scope from what is proposed at the state level.
It's not a surprise that a George W. Bush-appointed judge with a background as a corporate lawyer struck down a San Francisco ordinance, based on a ambiguous federal law that this very judge quotes is a "veritable Sargasso Sea of obfuscation."
Despite the fact that "the task of developing a clear rule to identify whether ERISA preempts a particular state law 'has bedeviled the Supreme Court'", this judge took an expansive view of ERISA pre-emption. But even in ruling against San Francisco and the labor unions who intervened, he keeps the door open, and proposed something that could pass muster:
He then describes the very structure in SB2/Prop 72 of 2004, and what is essentially what is expected to be part of the financing of AB x1 1: Assess all employers, but provide a credit/reduction for those who make health expenditures directly for their workers.
It's unfortunate that the decision will impact San Franciscans trying to get care, at least until the appeal. But it shouldn't impact state efforts, whether for AB x1 1 or SB840, and might even offer an opening...
(Largely cross-posted from a discussion at Calitics).
The San Francisco court decision and the ERISA issue in general raises the question: why do health reforms seek to raise money from employers, rather than other sources of funds? (The Sacramento Bee's Daniel Weintraub is like a broken record on this point.)
So $104 million's there; $56 million comes from individuals in point-of-service fees, which are these co-pays and monthly premiums based on ability to pay.
And the rest comes from — and here's the controversy, and this, there's always gotta be a controversy with health care — there's a mandate to businesses, starting with businesses with 50 employees or more. Incidentally, those represent, the mandate will represent only 13% of the businesses in the city, because 87% fall into the category of 50 employees or more or they fall into a category where they don't already provide a baseline of services. So you're affecting about 13% of businesses above 50 employees or more that aren't necessarily investing in the health care of their employees. It works out to a de minimis cost of the overall $196 million. It's about $28 million, the business mandate.
The reason we have a business mandate, again, is for no other reason, it's not intended for the money so much as to create a floor of expenditure. Here's the reason: I've got about 19 small businesses I've created, started restaurants and hotels. If the city said, as I have, that we're gonna take care of health insurance, I'd say fantastic. I'll dump all my health care; city picks it up. Then our uninsured population goes from 82,000 back to 190,000, 200,000, 300,000, and the system collapses. So we create a floor so there's no dumping out. And this is the controversy. The restaurant association, of which I'm a former member and large contributor with our nine restaurants, have sued us. And we'll see if they're successful. And if they are we'll have to be more creative.
AB x1 1 also doesn't raise very much new money from employers, but the employer contribution standard is an important component for practical reasons. The majority of Californians get coverage through their employer, or the employer of a family member. Even if we were to switch to another type of health care system, you would need some mechanism to keep that significant investment in the health system.
Mayor Newsom mentions the issue known as "crowd-out:" The more that a state or city offers coverage up the income scale, the more likely they might replace the coverage of employers that already offer coverage. In a world of limited resources, that'a problem, but can be solved by setting a minimum employer contribution.
Finally, the issue is fairness. Policymakers could simply have a flat tax that impacted all employers, regardless of whether they provide coverage. No one would question that arrangement under ERISA--but that would be grossly unfair to those employers who did offer coverage and were already paying for their workers, in essence asking them to pay more to help pay for the workers of those employers who don't offer coverage.
And that's the irony of the Golden Gate Restaurant Association's lawsuit. Despite their rhetoric, they aren't actually attacking employer contributions for health care. They are attacking the ability to provide some equity for employers who actually cover their workers.
And now, they is undermining San Francisco's important health program, and some of the uninsured that were going to be helped. Hopefully--appeals pending--not for long.
In reading the decision, he notes something that I noticed as well: that even this George W. Bush-appointed judge, with his very expansive view of ERISA pre-emption, left the door open for state and local health reforms. He even suggested what he thought might pass muster:
"The Court is not convinced that other alternatives for creating a program for providing public health care are not viable. Defendants propose an increased general tax requirement, but state the unfairness of not taking existing health care expenditures into account. Without wading into legislative dominion, the Court can envision such a tax program that take existing health care expenditures by private employers into account in the form of tax credits."
Such a structure was exactly what was proposed in SB2/Prop 72 in 2004, and it's a version of what is being proposed with the financing to AB x1 1.
There's lots of ways to structure an employer contribution requirement, and Maryland was different than San Francisco, which is different from Massachusetts, which is different from SB2, which is different from AB x1 1.
Some legal experts believe that the Ninth Circuit has on-point cases that may lead this case to be overturned on appeal. But even this ruling provides an opening.
A marauding tiger may not be only bad thing to come out of San Francisco this week.
This evening, a Judge Jeffrey White ruled with the Golden Gate Restaurant Association and against San Francisco and a key part of the ordinance that created the Healthy San Francisco program. Here's the San Francisco Chronicle coverage.
We've outlined in previous posts about the line of reasoning about how health reforms might withstand an ERISA challenge. The question of that federal law's impact on state and local health reforms has split judges--such as the appeals court in Maryland--and it's unfortunate that this particular judge sided against San Francisco's important health reforms.
Both sides were prepared to appeal to the Ninth Circuit, and the city is expected to file their appeal on Thursday. The city should appeal: San Francisco has a strong case to make on behalf of its residents, to improve their health care system while giving employers different options to meet their obligations.
Some will over-read this decision, both its implications for health reform in San Francisco and California: This is far from the final word on health reform; it's actually just the first round.
First, there will be an appeal in this case. As for state reforms like AB x1 1 (or SB840, etc.), they have different structures than the ordinance in San Francisco, which had a different framework than previous efforts in other states and counties. A ruling about one does not necessarily impact the other.
The proposed health reform in the California legislature would continue to allow multi-state employers to have a national benefits package for their workers, which is the focus of federal ERISA law. Like other state reforms, it needs to be vetted by the courts, but with its specific language and specificity.
San Francisco should and must appeal; The efforts of California and other states must continue; What's the alternative? Health reform is too important and too urgent to wait for the federal government.
Does San Francisco offer lessons for the special session? The article goes into all the ways that San Francisco is advantaged, including a relatively small uninsured population, and an already heavy investment in caring for them through a robust safety-net of clinics and hospitals. In other words, the opposite of California as a whole.
Yet even with this program--which is not coverage and does not offer access to coverage outside of San Francisco, they needed to take a second step--place a minimum spending requirement for employers, to prevent certain employers from abandoning their contribution to their workers' health care. The issue is called "crowd out."
Most employers provide health care, to attract and retain workers, and because it is expected. But if workers would get benefits anyway, why would employers spend the money to provide it? That means some employers would drop or scale back coverage. The issue is that the public program gets more expensive, since it is now covering more folks. It's not an issue if you can get enough money from the employer to actually pay for the care provided to his/her workers.
So when we hear of proposals to "replace" the employer fee in AB8 or the Governor's plan with another revenue source, the main issue is not some attachment to employer-based coverage; it's that you have to raise a lot more money to make up for it. There's also an equity issue, between those employers who provide coverage, and those who don't.
The San Francisco Chronicle reports that the city's new health program, Healthy San Francisco, just passed enrolling its 1,000th member. Whie not insurance (enabling enrollees to get coverage outside city borders), these San Franciscans now have a medical home, and can get the care they need an an affordable cost. It's a big deal.
The quick enrollments shows the need, and is remarkable given not just that SF is small, but the the program really only started in two locations, in and around Chinatown. A good start. Hopefully more victories to follow, in the city and statewide...
This weekend got a lot of attention for health care, with the formal adoption of the "individual mandate" in Massachusetts (although enforcement won't kick in until the end of the year). More about that later.
It's two key components: setting a minimum employer contribution to health care, and a rethinking of how to provide access to care to the public and private network of San Francisco providers. It's value is not just to expand and secure access to care for San Franciscans, but also to add to the state and national conversation on health reform.
I'm not a lawyer, but given all the activity at the state level across the country, it doesn't seem many agree with him. His entire argument is based on a split ruling by the most conservative appeal circuit in the nation, about a specific law in Maryland that is structured differently than the proposals in California, which is in a different circuit anyway. It's true that Maryland decided earlier this week not to appeal the court decision against their infamous "Wal-Mart law" to require the large retailer to spend at least 8% on health benefits. Reed compares the court decision--and I am not kidding or embellishing--to the Soviet tanks rolling into Prague as a final act against state health reform efforts.
We could get into the details of the federal ERISA law, but let's quote the actual decisions:
* The lower trial court: "Of course, I am expressing no opinion on whether legislative approaches taken by other States to the problems of health care delivery and its attendant costs would be preempted by ERISA. For example, the Commonwealth of Massachusetts has recently enacted legislation that addresses health care issues comprehensively and in a manner that arguably has only incidental effects upon ERISA plans. In light of what is generally perceived as a national health care crisis, it would seem that to the extent ERISA allows, it is strongly in the public interest to permit states to perform their traditional role of serving as laboratories for experiment in controlling the costs and increasing the quality of health care for all citizens." (From footnote 15)
* Characterizing and quoting the appeals court, the Center for Policy Alternatives writes: "The majority (2-1) opinion was written by a very conservative Reagan and Bush Sr.-appointed judge and was based on the assertion that "the Fair Share Act leaves employers no reasonable choices except to change how they structure their employee benefit plans…", an assertion that is simply false (as the dissenting judge pointed out).
* From the the dissenting appeals judge's statement: "Maryland is being buffeted by escalating Medicaid costs. The [Maryland] Act is a permissible response to the problem. Because a covered employer has the option to comply with the Act by paying an assessment — a means that is not connected to an ERISA plan — I would hold that the Act is not preempted."
It's about choices: The basis of the decision by the appeal court was that while there was technically an "option" for employers, it wasn’t "meaningful." Their ruling was based on the notion that no employer would choose to pay the 8% assessment to the state, for which they or their workers get no benefit, rather than directly provide coverage to their workers.
In San Francisco, and to various extents in Massachusetts and Vermont, and what is being debated in various states including California by our Governor and legislative leaders, the employers who pay the fee get the benefit of a workforce with access to health care, a workforce that is healthy, more productive, and has less turnover and training costs. For example, the "pay or play" models give employers "reasonable" and "meaningful" choices to benefit their workers, and thus themselves. Employers have options to comply with these local proposals without impacting their national ERISA health plans.
On Reed's challenge: Reed make a big deal that he can't find a ERISA lawyer to endorse Schwarzenegger's health plan. But lawyers are notorious about not giving a straight answer: most wouldn't endorse an Arbor Day resolution without five caveats.
But to say that you can't do state health reforms? I can find several through Google. Reed may be admitting he didn't read the court decision: I quoted above the dissenting judge who is undoubtedly a lawyer, who seemed OK with Maryland's law, even with its structure. Reed himself cites Pat Butler and other authors of various papers. And he mentioned that several states (Illinois, Pennsylvania, etc) have come out with their own proposals since the court decisions, and they all have their own legislators and lawyers in support.
California dreaming: Finally, Reed compares health reformers to the Dreamers during the Prague Spring, a time of creativity, liberalization, and openness before the Iron Curtain fell over Czechoslovakia.
But in the end, didn't the Iron Curtain fall? Didn't a playwright become president? Didn't the Dreamers ultimately win?
... but no, not another update on the week that Mayor Gavin Newsom is having.
Rather, Brian Leubitz at the Calitics blog provides a quick report and some video clips from Assembly Democratic Caucus town hall on health care reform. He suggests that Assembly Speaker Fabian Nunez would do well as a talk show host. He says good things about both the Nunez "Fair Share" proposal and single-payer. He calls the Legislative Republican attempt to minimize or dismiss the problem as "the denial of reason." http://www.calitics.com/showDiary.do?diaryId=1785
By the way, the Mayor's fortunes do have a impact on health issues. The passage last year of a near-universal access proposal in San Francisco was a big deal, both in actually helping people, and in setting a much higher bar for reform than Massachusetts or other models. But the campaign that won these reforms also was successful in recruiting an eloquent and telegenic spokesperson for health reform in Mayor Newsom. Will these events mute the Mayor on health reform?
A federal appeals court Wednesday upheld a lower court's decision that struck down Maryland's so-called Wal-Mart Act.
In 2005, Maryland passed legislation requiring businesses with more than 10,000 employees to spend at least 8 percent of their payroll on health coverage. Only four businesses met the law's description, Johns Hopkins University (which was exempt because it is a non-profit), Giant Food (a union grocery chain which spends more than 8 percent), Northrop Grumman, a defense contracter (which also spends more than the law required because of its high-salaried workers), and Wal-Mart -- ultimately the only target.
After the law passed, retailers sued, claiming -- among other things -- that Maryland could not legally force businesses to spend a certain amount on its "health insurance costs'' because it violated the 1974 federal law that says states can't interfere with businesses' benefit plans. The courts so far have agreed with Wal-Mart.
What implications does this ruling have for an employer requirement in California, in the different variations proposed by Governor Schwarzenegger, Speaker Nunez, or Senate President Perata? Not much.
The courts -- and ERISA -- do not say that state and local governments can't dictate spending on "health care services'' -- just benefits. So -- there is a way for states to make policy in this area without running into the constraints of the federal law.
San Francisco's Health Access Program (no relation), which has created an employer mandate, is believed to have a much stronger legal case to actually get around the federal restrictions.
San Francisco's Health Access Plan requires employers to spend a minimum amount on 'health care services.' Businesses could satisfy this requirement several ways--by providing insurance, contributing to a city pot to cover the uninsured, or reimbursing employees for medical expenses, among other things. The latter two examples would not violate federal law because it has nothing to do with a specific benefit plan.
A second point -- which is mainly just a beef but I'll make it anyway -- is that Maryland's 8 percent threshold would have hardly caused Wal-Mart to make any changes to its workers' health benefits. Wal-Mart testified in court that its coverage spending was between 7-8 percent, already (7.7 percent if their website is to be believed).
For Wal-Mart, that means having to increase its spending on 16,000 Maryland employees, who make an average of $14,400 a year. That means -- at most -- another $2.3 million a year. That doesn't even amount to one-one thousandths of Wal-Marts net profits in 2006.
The passage of the Maryland law was a important signal, after SB2/Prop 72 in California, that other states were looking at the issue of employers scaling back or dropping coverage, and the impacts not just on the uninsured, but on the public programs and thus taxpayers as well.
The concept that everybody--including employers--should pay their "fair share" is an important one. But given how different Maryland's law is from similarly-themed approaches, including those in New York City, Massachusetts, San Francisco, etc, the court ruling will have little actual impact on what has passed in other places, or what is being proposed.