A 3-judge panel of the 9th Circuit U.S. Court of Appeals says the San Francisco universal health care program does not violate the federal Employee Retirement Income Security Act.
The San Francisco program provides health care for the uninsured.
Employers with 20 or more employees have a choice between providing health coverage or by paying cash to the city so that the city can provide care for the employer’s otherwise uninsured employees.
Affected employers with 20 to 99 employees that do not cover all of the employees must pay $1.17 per hour per employee to the city, and affected employers with 100 or more employees that do not cover all of the employees must pay $1.76 per hour per employee to the city.
“We are asked only to decide whether Section 514(a) of ERISA preempts the employer spending requirements of the ordinance,” Circuit Judge William Fletcher writes in an opinion for the 9th Circuit panel on Golden Gate Restaurant Association vs. City and County of San Francisco.
“We hold that it does not. The spending requirements do not establish an ERISA plan; nor do they have an impermissible reference to such plans.”
The Golden Gate Restaurant Association, San Francisco, says it probably will appeal the ruling.
The American Benefits Council, Washington, says the 9th Circuit could erode the current federal framework for employee benefits.
ERISA is supposed to protect multistate employers from local variations in benefits rules, ABC President James Klein says.
The Golden Gate decision “opens the floodgates to every state and locality seeking to develop its own version of health reform, creating an impossible environment for major employers,” Klein says.
San Francisco City Attorney Dennis Herrera, who won an earlier ruling that permitted San Francisco to begin implementing the universal health care program earlier this year, has welcomed the new ruling.
“Unlike a more sweeping tax or fee, ‘Healthy San Francisco’ gives the vast majority of eligible employers credit for the health care coverage they already provide to their workers,” Herrera says in a statement.
If the city could not make employers pay for the health coverage program, it would have to tax all employers in the city to pay for the program, even though about 90% of the employers with 20 or more employees already provide health coverage, Herrera says.