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From the SF Chronicle: David Campos’ flawed measure on S.F. health care
July 25, 2011
From the SF Chronicle’s Editorial Page
David Campos’ flawed measure on S.F. health care
Supervisor David Campos has identified a legitimate concern: A few San
Francisco businesses are finding ways to evade a city requirement that
they provide health insurance to their workers. Unfortunately, Campos
has responded with an overreaching measure that would unduly punish the
vast majority of businesses that have been doing their best to comply
with the city’s landmark health care law.
The issue is whether employers who set up accounts to reimburse their
workers’ health care costs – one of the options under the 2006 law – are
making a good-faith effort to allow employees to draw on those funds. A
company with 20 or more employees is required to put $1.36 into an
worker’s account for each hour worked; the rate is $2.07 for businesses
with 100 or more employees.
Any funds that are not used are returned to the employer – and that has
amounted to about 80 percent of the money that is poured into health
care accounts by about 4,000 San Francisco businesses each year.
Why the low rate of usage?
Campos suggested that some companies are intentionally keeping their
workers in the dark about this benefit. In some cases, he said,
employers are severely restricting the types of medical expenses that
are eligible for reimbursement. He acknowledged that the “vast majority”
of businesses are “clearly following not only the letter, but the intent
of the original ordinance.”
The challenge here is to address the problem without creating bigger
ones. Campos’ plan fails this basic test. It would require employers to
roll over any unspent funds into the next year – which can amount to
locking up hundreds of thousands of dollars a year for businesses that
may be on the margins of profitability.
“There’s a bandwidth of knowledge that’s missing (at City Hall) about
what a crippling effect this would have,” said Steve Lombardi,
third-generation owner of a San Francisco sporting goods store.
Lombardi Sports offers health insurance to its full-time workers. Its
part-time workers are providing with the reimbursement accounts – and
the store makes sure they know about the benefit. Still, the store’s 50
part-time employees typically file about “two or three claims a quarter”
for reimbursement.
Why so few? The part-time employees at Lombardi, as at many retailers,
are relatively young and healthy.
A coalition of business groups has stepped forward with a much more
practical and effective solution to the problem identified by Campos:
Require employers to inform workers of the benefit and to keep them
updated on their account balances through the year – and require them to
reimburse all IRS-eligible health expenses.
“We’re quite frankly embarrassed by restaurants that are adding 3 or 5
percent (employee health care surcharges) to the bill and using it as a
profit center – that’s not right,” said Scott Hauge, owner of an
insurance firm and president of Small Business California. He suggested
the problem could be addressed without “adding to the layers” of costs
associated with hiring in San Francisco.
“It won’t be long before people find yet another reason not to open a
business in San Francisco, or move away, or find another way to handle
it,” Lombardi said.
The city’s business leaders have shown their willingness to work with
supervisors to craft a reasonable, well-targeted measure to tighten the
health care law. Campos’ proposal is scheduled to reach the full board
Tuesday. It needs to be sent back to committee for further review and
revision.
