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Supreme Court refuses to derail San Francisco’s employer fees

WASHINGTON U.S. Supreme Court Justice Anthony Kennedy on Thursday rebuffed an effort by the Golden Gate Restaurant Association to stop San Francisco at least temporarily from levying fees on restaurateurs and other employers to help fund the city’s universal health care plan.

The GGRA had asked that the funds not be assessed until the 9th U.S. Circuit Court of Appeals decides if the plan for extending health care to some 26,000 uninsured residents is a violation of a federal law that prohibits state and local governments from regulating employee benefits. Kennedy is the Supreme Court justice who hears emergency requests from San Francisco, where the 9th Circuit Court and the GGRA are located.

The association had earlier blocked the fees by arguing successfully before the U.S. District Court here that an aspect of the San Francisco program conflicted with the supremacy of federal law. That component, known as a play-or-pay plan, requires restaurateurs above a certain size threshold to either provide health insurance or pay a per-employee fee. The employer contributions would subsidize the cost of health care for San Francisco residents who are uninsured but not poor enough to qualify for the state-administered Medi-Cal health care program.

District Judge Jeffrey White agreed with the GGRA, overturning the play-or-pay provision on Dec. 26.

But the city filed an appeal with the 9th Circuit Court. On Jan. 9, a three-judge panel from that court gave San Francisco a go-ahead to start assessing the fees while the appeal is decided. It indicated at the time that the city would likely prevail in its challenge of White’s decision. Though the funds have been assessed since that time, they are not due until April 30.

Under San Francisco’s multiphase plan, employers would pay about 20 percent of the estimated $200 million that would be needed to extend health care access to another 26,000 uninsured residents. The rest of the funding would come from state and local taxes and contributions from patients who make use of the system.

The situation in San Francisco has been closely watched because a number of states, including California, have also looked at play-or-pay plans as a way of extending health insurance or coverage to all residents.

The GGRA has voiced support for universal coverage, but has called for funding the plan through a slight increase in the local sales tax rather than by assessing payroll fees.

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