At a time when American employers are preparing to extend health care access and affordability under the Patient Protection and Affordable Care Act (PPACA), San Francisco may be forcing its employers to move in exactly the opposite direction. A newly proposed amendment to the city’s health care mandate – the Health Care Security Ordinance (HCSO) – would limit health care options for employers, place additional burdens on local businesses and ultimately result in lost jobs and reduced benefits for San Franciscans.
San Francisco is a pioneer in providing universal access to health care, and San Francisco employers have largely embraced these efforts. Just four years after the city enacted its health care mandate, local employers are providing more than 200,000 employees with over $920 million in health care expenditures annually. While the vast majority of these businesses provide traditional health insurance, a growing number of small and medium-sized companies rely on Health Reimbursement Accounts (HRAs) to comply with the law.
A proposed amendment, introduced by Supervisor David Campos, would eliminate the use of these reimbursement accounts where unspent money reverts back to the employer. In other words, employers who contribute to an employee’s health reimbursement account will be unable to recoup the unspent portion at the end of each year. Instead, employers would be required to maintain the account in perpetuity – even if the employee never uses it, and even if the employee moves to another job or another state.
This added financial and administrative burden will come with a high price tag for local businesses. The Chamber estimates that employers unable to recoup the unspent portion of their health care expenditures will see their labor costs increase 10 to 15 percent and their health care compliance costs more than triple – a $50 million hit on mostly small businesses. As a result, many businesses will be forced to reduce the number of people they employ and the hours their employees work. Other businesses may be forced to close operations all together.
The nature of the amendment is also raising legal questions under the Employee Retirement Income Security Act (ERISA), which expressly prohibits local governments from forcing employers to provide certain types of health insurance options. Amendments to the HCSO may also overlap with PPACA regulations as they are rolled out. The last thing the city needs is more legal confusion that could result in costly lawsuits as we work to close a $306 million budget deficit and preserve vital city services.
One primary goal of both national health care reform efforts and the city’s Healthy San Francisco program is to increase access to health care. A far better approach to achieving this goal is to increase employee awareness and utilization of the health care expenditures employers are already providing. The business community supports amendments to the HCSO that strengthen notice requirements and ensure that more workers are aware of their benefits and how they can take advantage of them. But limiting employer choice is never a good alternative.
The Chamber and other business groups continue to meet with Supervisor Campos and other Board members and have opened a dialogue on these issues, issues which are so critical to employment and business viability in the city. We all seek a solution that is in step with the spirit of national and local health care reform.