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Fed Court Overturns Key Part of "Healthy San Francisco" Coverage Plan -- ERISA

Fed Court Overturns Key Part of "Healthy San Francisco" Coverage Plan -- ERISA

December 28, 2007

Click here for San Francisco Chronicle article. Yesterday, US District Court Judge Jeffrey White overturned a key portion of the Healthy San Francisco program which is designed to provide access to health services for at least 80,000 uninsured city residents. The portion struck down requires most employers to either provide health insurance to workers or pay a tax to the City to finance the program (tax levied on for profit businesses with 20+ workers and non-profits with 50+ workers). The program started this year enrolling some uninsured with incomes under 100% of the federal poverty line; on 1/2/08, the program expands to uninsured residents with incomes up to 300% FPL. As a result of the new ruling, the City will be unable to expand eligibility to those with incomes over 300% FPL.

Judge White ruled that the employer assessment violates the federal ERISA law (Employee Retirement Income Security Act of 1974) which, among other things, prohibits state and local governments from mandating that employers must provide health insurance to their workers. ERISA was the federal law cited by Maryland and New York federal courts in overturning so-called Wal-Mart laws passed last year to require very large employers to cover their workers or pay a tax.

Daniel Weintraub, in the Sacramento Bee Blog, (registration required) notes a portion of the Judge's ruling that suggests a potential way around the ERISA dilemma:

But White, at the very end of his ruling, suggested there might be another way for state officials to skin the same cat. He suggested tax credits. This is something I have wondered about in the past. It would work like this: every employer would have to pay a higher payroll tax, or fee to the state. Let's say it's six percent. They have to pay regardless of whether they offer health benefits to their workers. And then, in a separate part of the law, every employer would be entitled to a tax credit of six percent of payroll to offset the cost of health care they provide their workers. Such an approach pursues and delivers the same result but with only a little more finesse. White's opinion indicates that, at least in his court, it might survive a challenge.

Not sure the Judge is right, or even serious -- still, since a Judge proposes it, may be worth kicking this tire.

Once again, as all the other employer mandates laws fall under ERISA, the Massachusetts and Vermont employer mandates stand challenge-less. Yes, they are ridiculously small. And, they stand.

As always, check out the Health Access California blog for daily updates on this, CA health reform, and lots more.