Volume 40 Number 39

June 28 – July 4, 2006

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Shotgun marriage


› sarah@sfbg.com
Mayor Gavin Newsom has garnered media accolades for his San Francisco Health Access Plan, which would provide the city’s 82,000 uninsured residents a package of health care services, including preventative, primary, specialty, and emergency care, lab work, X-rays, pharmaceuticals, and inpatient hospitalization.
All of this sounds good until you consider how the press has glossed over serious flaws in Newsom’s plan, which was coauthored by Sup. Tom Ammiano. And SFHAP could be doomed to fail unless coupled with the more controversial Ammiano-authored health care legislation: the Worker Health Care Security Ordinance (WHSCO).
Ammiano’s ordinance would require employers operating within the city that have at least 20 employees (or 50 employees for nonprofits) to provide health care coverage for their workers. Predictably these mandatory spending requirements have the business community screaming its opposition — and Newsom, who is up for reelection next year, pussyfooting around the issue.
But the truth is that Newsom hasn’t detailed how to fully pay for his plan or avoid its policy pitfalls without the financial and structural boost that WHSCO’s mandates provide.
“There is no separation between the two pieces of legislation except in the way they’ve been presented. They’re joined at the hip, and there will be no funding gap with both pieces of legislation working together,” Ammiano told the Guardian.
Here’s how the plans work: To cover the estimated $200 million cost of Newsom’s sliding scale SFHAP, the city would contribute the $104 million it currently spends on the uninsured, hoping that more preventive care would efficiently translate into lower emergency room costs.
Add that to an estimated $60 million that the city thinks higher income enrollees will pay, plus an additional $10 million in estimated savings from increased federal cost-sharing. But even if all that works out, there’s a $30 million shortfall.
Enter Ammiano’s plan, which would generate an estimated $30 million to $40 million in employer contributions. There’s also another key piece of Ammiano’s plan that saves the one Newsom is touting: Unless Ammiano’s plan becomes law, there’s nothing to stop employers who already offer health insurance from saving money by dumping their workers into Newsom’s newly minted program, thus expanding the number of uninsured and potentially overwhelming the city’s clinics.
While Ammiano’s plan requires businesses with more than 20 employees to cover 50 percent of workers’ health care costs ($1.06 an hour), and those with more than 100 employees to cover 75 percent of those costs ($1.60 an hour), it also offers employers a wide array of health care expenditure options, including providing insurance, creating health savings accounts, or paying into the Health Access Plan.
There’s a reason for these options: the federal Employee Retirement Income Security Act. The act prevents cities and states from specifying which health care plan employers must provide. But as Ammiano discovered, municipalities can stipulate how much employers must spend on health care.
Asked why he thinks Newsom isn’t giving Ammiano’s mandatory plan his public blessing, Ammiano waxes diplomatic.
“I asked the mayor, ‘So, what could you live with?’ and the answer was the Health Access Plan, in which everyone is covered, and there are no preexisting conditions,” Ammiano told us.
But the business community latched onto the idea as if it existed in a vacuum. Nathan Nayman of Committee on Jobs helped develop the Newsom plan but continues to slam Ammiano’s ordinance. At a Budget and Finance Committee hearing on June 26, Nayman called Ammiano’s ordinance “a full frontal assault on small and medium businesses.” But when challenged by Sup. Ross Mirkarimi over how killing the ordinance would incapacitate Newsom’s plan, Nayman suggested “putting both plans on hiatus.”
Ammiano said he’s running out of patience with Nayman and his downtown allies.
“They didn’t lift a finger except to come in at the last minute with a proposal that was neither progressive nor legally viable,” he complained, referring to an 11th-hour suggestion that businesses be charged a license fee. The fee would have fallen heavily on businesses with less than 20 employees — which don’t have to provide health insurance — and likely would have been challenged as a tax in disguise, thereby triggering a ballot.
Not that the Ammiano camp is afraid of voters. In 2004, 69 percent of San Francisco voted for Proposition 72, which would have provided employer mandated health care had it not narrowly failed statewide. So while Ammiano anticipates resistance from the business community, he isn’t expecting a “monolithic rebellion.”
“They’ve been doing their own polling, so they know if [mandatory health care spending] goes to ballot, it’ll pass, and they’ll only get much more rigid legislation,” Ammiano told us.
Ken Jacobs, who Ammiano describes as the brains behind WHSCO and who was also part of the mayor’s 37-member Universal Healthcare Council that developed SFHAP, told us WHSCO not only helps workers who don’t have health care access but also serves to stop the erosion of employer-sponsored coverage.
Jacobs — who is deputy chair of UC Berkeley’s Labor Center — said it’s important not to erode the 85 percent of SF-based businesses already providing employee health care benefits. Even Newsom’s health director, Mitch Katz, has publicly said that good health insurance is better than the access plan Newsom is touting.
Crediting San Francisco’s existing clinic system for making SFHAP conceptually possible, Jacobs noted that its estimated $200 million annual cost is based on “a fully ramped-up program in which every uninsured resident is enrolled” — something he believes won’t happen immediately.
Jacobs also points out that if employers who currently don’t offer medical benefits sign up for private insurance because of WHSCO’s mandate, their employees will no longer be uninsured, thus reducing the public system costs. He also believes that because WHSCO makes large employers spend $274 a month, it’s unlikely they’d opt for SFHAP because that plan is limited to care in San Francisco.
Conversely, SFHAP requires participants to be willing to apply for state and federal benefits. They also must pay monthly fees ranging from a nominal $3 for those earning below $19,600 to $35 for those earning between $19,600 and $40,000 to $201 a month for those earning over $50,000.
There’s also one more reason why Newsom will likely to be forced to accept the marriage with Ammiano’s plan, despite the grumbling from his business community supporters: Eight supervisors have now signed on as WHSCO cosponsors, giving it a veto-proof majority.
Newsom’s spokespeople did not return our repeated calls for comment, but Eileen Shields of the Department of Health confirmed that “Ammiano’s legislation supports making the SFHAP a reality financially.” SFBG