San Francisco’s employer-funded health care plan given a green light

SAN FRANCISCO A federal appeals court has given San Francisco the go-ahead on at least a temporary basis to implement its controversial employer-funded plan for extending health insurance to all workers in the city. Under the program, restaurants and other businesses that employ at least 20 people are required either to provide health insurance to every staffer or pay a fee, computed by the media at $1.17 to $1.76 per hour for each worker.

The funding mechanism was scheduled to go into effect Jan. 2. But U.S. District Judge Jeffrey S. White ruled the week beforehand that the employer mandate conflicted with national legislation that designates the federal government as the lone body that can regulate employee benefits.

Ruling on a legal action brought by a group that included the Golden Gate Restaurant Association, White blocked enactment of the provision. Observers noted at the time that the ruling could affect a number of so-called play-or-pay health-care funding proposals that were pending in other cities, counties and states. Fourteen states are currently considering that mechanism for extending health insurance coverage, according to the National Restaurant Association.

The city appealed White’s decision. On Wednesday, a panel of judges from the U.S. Court of Appeals for the 9th Circuit said the local government could proceed with the funding mechanism until the appeal hearing is completed. “The public interest would be served by a stay,” the panel wrote.

In releasing its decision, the panel noted the “strong likelihood” that the 9th Circuit court would overturn White’s decision.

While expressing disappointment with the appellate court’s decision to allow the city to begin collecting the health fees from businesses, representatives from the Golden Gate Restaurant Association said they remained optimistic that the judges would uphold the lower court’s decision.

“Once they see all the information and read all the briefs the previous judge had to review for 14 months, I think they will side with us,” said Dan Scherotter, chef and owner of Palio d’Asti restaurant in the city’s Financial District and incoming president of the GGRA.

After White blocked the employer-payment provision of the universal coverage plan, the GGRA issued a statement in support of funding the program with a 0.25-percent sales tax instead of employer contributions.

A1-percent state sales tax has been supported by the California Restaurant Association as a favorable alternative to a play-or-pay program for the whole state. About a year ago, Gov. Arnold Schwarzenegger called for adopting a program statewide that would be funded in part by businesses, and convened a special session of the state legislature to hammer out legislation. No bill has been passed.