Healthy San Francisco Health Plan Challenged Under ERISA Guidelines
Updated June 2010 (Archive)
In February 2006, the Universal Healthcare Council, created by San Francisco Mayor Gavin Newsom convened to develop a health care plan to provide access for San Francisco's 82,000 uninsured adults. The Council proposed the San Francisco Health Access Program which was incorporated into Supervisor Tom Ammiano's Worker Health Care Security Ordinance (WHSCO) and passed unanimously in July 2006. The ordinance provides for the implementation of the Health Access Program (now known as Healthy San Francisco) in addition to the Employer Spending Requirement (ESR) which will fund a portion of the health care program.
The plan does not offer insurance but rather it provides enrollees with a medical home that offers primary and preventive and urgent care, referrals for more specialized treatment, emergency care, family planning and prescription medications among other services within the San Francisco city limits. Dental and optometry coverage are not included.
The program is intended to provide access to care for uninsured adults living within the city limits who do not qualify for coverage under Medicaid. Once fully implemented, the program is expected to cost around $200 million per year and it will be funded through taxpayer contributions, participant co-payments and monthly premiums based on a sliding scale, and the ESR. Under the ESR, for-profit employers with more than 20 employees and non-profit employers with more than 50 employees will contribute $1.17 to $1.76 per hour per employee towards 1) employer-provided insurance; 2) health savings accounts; 3) direct payment of medical bills; or 4) payment towards the new city program, Healthy San Francisco.
In November 2006, the Golden Gate Restaurant Association (GGRA) challenged the ESR mandate claiming that it violates the 1974 federal Employee Retirement Income Security Act (ERISA) which establishes national standards for pension and health plans in the private industry. The GGRA claims that the new fees are neither affordable nor fair to employers and participants and will result in financial ruin for already struggling businesses, discourage the opening of new restaurants and hurt local job growth.
Federal District Court Judge Jeffrey White sided with the restaurant association in December 2007, concluding that the mandate conflicted with federal regulation of employee benefits. The ruling would limit the city's ability to expand the program to residents with incomes greater than 300% FPL. The City then turned to the Ninth U.S. Circuit Court of Appeals to call for emergency stay on the ruling to allow the implementation of the fee and an increase in eligibility to 3 times the FPL as scheduled on January 1, 2008.
On January 10, 2008 a Federal panel of judges from the United States Court of Appeals for the Ninth District granted the city the right to implement the mandate under a temporary stay of the district court order until the city completes the appeals process later this year. The panel further indicated that it was likely that San Francisco would win the appeal because they are not regulating employee benefits plans, but rather giving employers options to improve their workers' health care.
In February 2008, the GGRA again attempted to block implementation of the ESR, but Justice Kennedy of the U.S. Supreme Court upheld the Court of Appeals' emergency stay allowing the program to continue its expansion.
On September 30, 2008, a three judge panel of the Ninth U.S. Circuit Court of Appeals ruled in favor of the city and county of San Francisco, stating that Healthy San Francisco does not interfere with ERISA. To see the detailed report issued by the Ninth District Court click here.
On November 3, 2008 two employer groups of GGRA filed a "friend-of-the-court" brief to the decision of the Ninth U.S. Circuit Court of Appeals, a hearing has yet to be scheduled, but immediate review was requested.
As of November 2008, enrollment in the program has reached 33,188 participants with more than 734 employers signed up for Healthy San Francisco. Additionally, participation of primary providers and hospitals in HSF is on the rise. The program is still limiting enrollment to adults with incomes up to 300% FPL, but ESR mandates have been implemented.
On February 10th 2009, Mayor Gavin Newsom announced that residents with annual incomes at or below 500 percent of the F.P.L. would be eligible to participate in the program.
On June 6th 2009, the Golden Gate Restaurant Association filed a petition for a writ of certiorari to bring the case before the United States Supreme Court, claiming that the ESR mandate did violate ERISA and that the ruling of the Court of Appeals was in conflict with the Fourth Circuit's 2007 ruling in Industry Leaders Association v. Fielder. The city of San Francisco filed a response brief contesting both points.
On October 5th 2009, before deciding whether or not to grant review, the Supreme Court sought the opinion of the Solicitor General.
On May 28th 2010, Acting Solicitor General Neal Katyal filed a brief recommending that the Supreme Court not review the case. The brief stated that the enactment of federal health reform made review of the case unnecessary.
On June 28th 2010, the Supreme Court agreed with the recommendation of the Acting Solicitor General and chose not to review the case, allowing the Healthy San Francisco program to continue.
As of June 2010, enrollment in the program had reached 53,038 participants.
More Information on Healthy San Francisco:
More Information on ERISA's Impact on State Policy