More here about yesterday's blog considering employer mandates to pay a certain dollar amount for health services costs in the form of contributions to a health insurance plan or in the form of quarterly payments to a government entity (in this case San Francisco and its Health Access Program).
We are likely to hear about some of the reasoning laid out about play or pay for employers in the case: Golden Gate Restaurant Association v City and County of San Francisco and San Francisco Central Labor Council; Service Employees International Union, Healthcare Workers-West; Service Employees International Union, Local 1021; Unite Here!, Local 2.
(You can read the text by looking up the 9th circuit order of January 9, 2008.)
The decision comes from the Ninth Circuit in California so is NOT the law of the land and will vary from state to state. However, it addresses an issue that more and more states will have to consider: Will state laws that include play or pay provisions for employers be enforceable or will they violate the Federal law, ERISA and therefore be stricken down.
San Francisco is in the process of trying to maintain a law that would require employers with greater than between 20 and 50 (for nonprofit companies) employees pay between $1.17 and $1.76 per hour per employee for those employees working ten hours or more for health care for those employees. The law is one known as play or pay...participate in health insurance plans for employees or pay the city on a quarterly basis for an insurance fund for such employees.
Let's not maintain the suspense: The Ninth Circuit ordered a STAY: Meaning that the ordinance will remain in effect until a decision on appeal is rendered. The appeal may strike down the law, but the stay order explains why there is a good chance the law will be upheld.
For this kind of law, the devil will be in the details. The court first concluded that ERISA does not preclude this ordinance for two reasons: First, it does not require that employers establish ERISA plans or make changes to ERISA plans and second, the law does NOT require a level of BENEFITS for employees, only a level of PAYMENT.
Note, as consumers, therefore this case and this ordinance speaks only to our concerns about paying for medical services, it does not address access to or quality tactics for achieving access or quality.
In granting a STAY (the law goes forward until a final appeal decision), the ninth circuit noted a probability of success (law would be upheld) and a balance of "hardships" meaning it would be more difficult to retroactively get payments if the law is upheld (which was considered likely) than it would be to simply let the law collect fees until an appeal decision.
First, back to our dictionary of who this affects:
1) employers of more than 20-50 employees (for profit companies 20)
2) the ordinance is for San Francisco CA employers
3) Employers are broken down by what kind of health insurance coverage they currently provide: Full High Coverage ERISA, no new requirements as long as record-keeping reflects they are making required health care expenditures, Selective High Coverage (meaning that some employees such as part -timers are not covered by the plan) would keep their plans and pay for other employees to the city, Full low coverage ERISA plans would remain untouched as long as expenditures for employees reached mandated levels otherwise additional payments to San Francisco would be required, Selective low coverage would also require making up the difference through payments to San Francisco.
ERISA sections: The sections of ERISA discussed include:
514(a) that provides that ERISA preempts state law and for such provision to kick in means that a law has a "connection" with ERISA if it governs an ERISA plan or refers to such a plan. Here, the 9th circuit found that SF's law was okay because it didn't discuss plan features, only health insurance payments, independent of any plan proven by the fact that it governed all employers and that ERISA is not necessary to the law being enacted.
For years, employer-sponsorship of health insurance (ERISA plans) have completely excluded part time workers. This ordinance covers such workers (10 hours or more per week). From this point of view, it is good for consumers. Many companies altered jobs into part-time in order to avoid paying benefits. Based on the reading of the Golden Gate decision, this ordinance is a step in the right direction from the very narrow point of view that ignoring part time workers, those least likely to be able to afford ever-rising health care.
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