A three-judge panel of the 9th U.S. Circuit Court of Appeals last week ruled that San Francisco's universal health care program, Healthy San Francisco, can continue because it does not violate federal regulation of employee benefit plans, the San Francisco Chronicle reports. The ruling overturned a lower court decision that the Healthy San Francisco plan placed requirements on employers in violation of federal law.
Healthy San Francisco was approved in 2006 to provide access to health care services at city clinics and public hospitals for the city's uninsured residents. The program requires private companies with at least 20 employees and not-for-profit groups with at least 50 employees to either provide health care benefits to workers at a cost that meets minimum spending levels or help cover the cost of Healthy San Francisco.
Employers represented by the Golden Gate Restaurant Association filed a lawsuit against the city claiming that the program violated the federal Employee Retirement Income Security Act, which preempts certain state and local governments requirements regarding employer-sponsored benefits, according to a report in the Los Angeles Times. The Bush administration in April filed arguments in the lawsuit, stating that the ordinance that created Healthy San Francisco was invalid and would create "a potentially bewildering and conflicting array of mandates."
In the ruling, the judges found that, "The spending requirements do not establish a ERISA plan." According to the Associated Press, the panel "stressed that it was not ruling on the wisdom of the plan, but only the legality of the mandatory employer fees" under ERISA. In the court's opinion Judge William Fletcher wrote, "We are asked only to decide whether ERISA pre-empts the employer spending requirements," adding, "We hold that it does not."
"The decision by the U.S. Ninth Circuit Court of Appeals threatens to erode the essential federal framework for employer-sponsored health plans," said American Benefits Council President James A. Klein regarding the Golden Gate Restaurant Association v. City and County of San Francisco ruling.
For more than 30 years, America's voluntary employer-sponsored health care system has relied upon the federal standards provided by the Employee Retirement Income Security Act of 1974 (ERISA). "The 'pay or play' mandate at the center of the San Francisco case directly threatens continuation of these plans, particularly for large, multi-state companies that rely on a uniform set of rules," Klein said.
"This 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 — and the millions of American workers who value their employer-sponsored health plans."
The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.