San Francisco Ruling Buoys Prospects of State Employer Mandate
A ruling in San Francisco this week upheld a new city law requiring businesses to spend a certain amount on health care, either in coverage for their workers or in payments to the city, a move that could bode well for a similar provision in compromise health care reform legislation (ABX1 1) negotiated by Gov. Arnold Schwarzenegger (R) and Democratic lawmakers.
San Francisco is the first city in the nation to guarantee that uninsured residents have access to health care services. However, a key funding mechanism of the program -- the employer pay-or-play mandate -- drew a lawsuit from the Golden Gate Restaurant Association.
The group claims that the mandate violates the 1974 federal Employee Retirement Income Security Act, or ERISA, which governs employee benefits.
A federal judge sided with the restaurant group, but the city appealed, arguing that the Healthy San Francisco program does not violate ERISA because businesses have the option of providing coverage or paying into the program.
San Francisco asked the court to authorize the employer contributions while the appeals process plays out. A three-judge panel granted the city's request this week and said that San Francisco's appeal has "a probability, even a strong likelihood of success."
Opponents of state-level health care reform efforts have raised the possibility of a legal challenge under ERISA, but the San Francisco ruling could set precedent against such a case.
Meanwhile, the Legislature returned to session this week and took action on several pieces of legislation, including a bill involving health insurance policy cancellations and a measure to revise the certification requirements for nurse practitioners.