San Francisco Health Care Security Ordinance
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FILE NO. 051919
Amendment of the whole
in committee, 7/5/06
ORDINANCE NO.
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[San Francisco Health Care Security Ordinance]
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Ad,ni„r,MB,.Co* » MS Ch.p»,
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operative date.
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Note:
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^^e-underline italics Tim^K Mew Rnmnr,-
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are ww/tr-fftrowg/i ii,,lioi Times NcVkomnH—
Board amendment additions are double underiinAH
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Board amendment deletions are
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Be it ordained by the People of the City and County of San Francisco:
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Section 1. Declaration of legislative findings and intent
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Ad San Francisco
residents should have quality, affordable health care. Currently, approximately 82,000 adult
San Francisco residents
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employed San Fr
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employed.
San Francisco
taxpayers bear the
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cost of paying for emergency room visits and
other unnecessarily expensive health
care for the uninsured. By establishing a Health Access i
Program for uninsured San Francisco residents with an emphasis
on preventive care and by I
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requiring businesses to make reasonable health
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employees depending on the businesses
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taxpayers for providing health care for the uninsured can be reduced. At the same time, San
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,
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care expenditures on behalf of their
pay. *he burden on San Francisco
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Francisco can offer uninsured individuals the choice to enroll in
3 system that provides quality j
health care for an affordable
price and offer employers the choice to enroll their employees in
that system. San Francisco also has
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interest in preventing a “race to the bottom" in
which employers stop paying for employee health care to remain competitive and instead shift
those costs to San Francisco taxpayers.
Supervisors Ammiano. Daly. Mirkarimi Dufty. Ma. McGoldrick, Maxwell. Peskin
board of supervisors
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Section 2. The San Francisco Administrative Code is hereby amended by adding
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Chapter 14, Sections 14.1 through 14.8, to read as follows:
SEC. Ul. mORTTITT.F.r DEFtNITinNC
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Care Security Ordinance.
^ Short Me. This Chapter shall be known and mm ht>
Definitions. For purpose.,ofthh Chapter ih.
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as the “San Francisco Health
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term.,,hnll hny,rh.
meanings:
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m "City"means the City and Countv ofSan Franr.i.^m
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(2) "Covered empinypp
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as an
means any person who worhi in the City wh^re such
employee entUledio payment afa minimum wage from an employer under the
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Ordinance as provided under Chapter 12R ofthe San Francism
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mformed work for compensation for his 6r her emnlo^er for ninety fm dm.
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vg Cade and ha.^
. that
Mt term "emnlovee"shall not include persons whn are managerial supervisorial or confidential
employees, unless such employees earn annually under ^77^4Sn or in 200/ and for subseuuent
the figure as set by the administering agency, and shall not include those nen.ny,. ,.,u^
are eligible tn
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years.
receive benefits under Medicare or
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lhe.CmlianHealthandMedir.nl P,-oeram Uniformed
(CHAMPUS). Nor shall '‘covered employees^'indurJp
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persons who are ‘'covered emplnvee.^” as
denned in Section 120.2.9 ofthe HmUU Care Accountnhilio.
Chapter 120 ofthe Son
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Francisco Administrative Code, ifthe employer meets the
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those employees. Nor shall "covered emplny^^^ include those persons who are empfnypc/ a.
...r..,,, ,•m Section 120^ fnr
> a
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nonprofit corporation for up tn one year as trainees in a bona fide training oroornm
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Federal layi\ which training pro^am enable.^ thp trainee to advance into a permanent position
mi^iided that the trainee does not replace displace, or lower
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position or emplnvp.p
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LS) "Covered emplnvRr means any rnedium-sized or lar^e business a.^ defined hplnw
msamn^i
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m business within the City that is required to obtain a valid San Fmnri.co husine^.
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^^rMicgteJimUhe San Franci.crn
rnii^rtrr s office or. in the case ofa nonprofit
business with
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Small husin^s..c are not "cnverpri
ermlQmis" and are exempt from the h^nUh
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corporation n
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^^^^^-^Smdingjmmrernents under Sprtir.^ 7 4 ?
employin, um,j,sdeMne^c,io„ 135 oUk.
oUm^MmonMmdinS^n 13 of,he CaW„r„^„,
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-JdnMoyer"shall include all memhers ofa "c
omrolledgroup ofcorsoratign^ gs defined in
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l^^^^^joLtMUnited^tes Internal Revenue
except that "more than 50 perrem".Unp
^-i^MMMjQr^lMJemiSO percent" wherev......u
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termasp^s in Section 156S(a)fl) nfiUo i^fr^rrJ
Revenue Code and the determinmin
and
U63fe)(3)fC) ofthe Internal Revenue Cnrto
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^2i '!Health Access Pmaram
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^^^^^^i^^^3mlthcareJou^
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(S
^3mns_g^anFrancis^epartment ofPuhlir Pto.,pi, program to
Francisco re.trt.^io
Health Access Prnv
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mm^mmCmeanLom uninsuredSan Frn.r-i..^ resident.
,r ,er
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JmlmLOr^nrolU
.He .erme ee.„H,.eH....
the_Demrtrnent ofPublic UanUu
ill—.Health care e.rpenditure.”
to
r.n^er.P
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the, rn.f nf.uH.U
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services for its covered e.mplovee.s^
d^ckding^bMnollUni^ (a) contributions h^> ...nU
mployer on bHwJfpfUs covered e.mpIn.,.o. to a
hemuavings^ccount as defined under
3^Hion223oj[theUmted States Internal Re^u>....
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or to
any other accomi having substnntinlly
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sem ent
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■-. ,He .ureH„ee e,.,„ue care 1
purpose ofneoeiH,...
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^ei-vices for covered emplovp.ps; (P\
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health care
costs incurred hv n
ca re
covered employer in the direct delivers, nf
to
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Superasors Ammiano, Daiy, Mirkarimi . Dufty, Ma, McGoldrick, Maxwell, Peskin
BOARD OF SUPERVISORS
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Notwithstanding any other provision ofthis xubsectinn^ "honlth care expenditure" shall nm
Ugyment made directly or indirectly fnr M,nrk^r.’
anv\
cmpensation or Medicare henefit^
"Health care expenditure
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care exnenHinn-. tUr. a covered
mEloyer shall be re.ulr.ri „a^,f^reaMougmUJor each ofUs
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Jt me.Mmlovee to the CAtv Hen.lth Service Siv.fPry^
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Charter based on the annvnl ipv,
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contribution prorated on
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quarter,
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IheNieqlttcare expenditure rate ” shall be determir,.ri
'average contribution"for a Ml-
misugnup Section A8.473 ofthe San Fm.H.rn
county survey amnunl for the annlicnhJp f,.rnl year, with such nvprnor> \
an hourly basis hv dividine the monthly m.4ra^e contribution hv one hundred
M.'ventv two (172)(the number ofhour.^ worked
i a month by a full-time emninvee). The "hy>y,hu
- - in
care
expenditure rate"shall hp •
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_ nty five percent(75%)ofthe vrecedin^ hn.,.ly amase contribution fnr
krS^bmnesses andjjjbuoercent(50%)far medium-sized
(9) "Health care
^^rvim::jmms_medical cgre^^^ces, or soods that n,n.>
-deducmejnedicQl pare e_^penses under Section 7 U ofthe Internal Revenue Cnytr
> as tax
or medical carp
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expenses.
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(LO) ‘‘Hour paid" or "hours paid" means n
hour orj^k hours for which, g oer.ion ;>
mL-dmse_sor is entit!edMbe„paid wa^es for workperformed within the City
vacation
hours and paid sick leave hours. For salaried
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mrsons.Clhg.urs paid" shall be calculntPd based on a
iMiguLwork week for a full-time emplnvpy>
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—Lgr^e business ’’ means an employer for which averase ofone hundred nnn\ or more
covered employees per week perform work, fnr compensation durin? a quarter.
an
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^—Medium-sized business" means an emnlovp.r for which average ofbetween twenty
(20) and ninety nine (99) covered empinvppc mry^eek_perform work for compensation dunno
an
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a
quarter.
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(12) "Person’
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mgn^gnyjmirgl person, cor^orgdgn^jok^rojy^^
mociation, joint venturejimited liability company, or other le^gl e.ntiir
MM)_i:Required hmlth care expenditure ’■ means the tntnl h^nhu care expenditure that n
covered employer is required to mntp
eyei-y quarter for all its c overed emplnveer
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^^- ^^-^^^mMbusines^eans an emnlnvpr (nr
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^^y^rM^plovees per week perform ^>n.Ir f..
gn_avera2e offewpr than hvtmn, nm
compensation durine a qnnrtpr
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SEC. 14.2. S4 N FRANCISCO HEA1.TPf ACCESSPROGRAM
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(^^UllcSanFrancisco Dppnvtrnent ofPnhUr U.nPU shall administer the Health Arrest
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£^^^SLPm._JJndeaM
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care from a network
Prncrrnr.
-^ JPmmedSgn_Frmcisco residents may obtain health
PomlstingMSctn Francisco Gmeral Hospital anr)tho
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I
rtmentofPuhlir
prnviAnr. tUn.
^FidMeLcriteriaJoj^^^
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IMMJhe program's gunJip,
Health Acre..
IS not an insurance plan fm-
Access Program participantx
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shall nnnrPi.nf.
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mb a third parts’ vendor to aAniiinta..
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:=^£rogrammerations, includim basic customer
Utilizatinn hWi..^
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-and communication with the participants^
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IcrThepPie:^
ppm to uninsured San Francisco rp.siApyii^
Qf-mplmmtMatMS^ElmbilitV criteria .Unit
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no
be established_hyjhe Department nfPuhU.Health
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Program bns.A r..
but
apre::existin<2 conditiny,
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? terms
^^-^^FrdlmenUtLh^d^^
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payments
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individuah
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prioritize^eryices for low and
fr„„ .1.. r-it\[.
Funding from
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—^Ancpmej?ersom^h costs based nn <h.
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dcce^Program participant’s nhUtH to miCFundUtgJmtJhe City shall suhsirJh.o employee
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enrollment by medium-sized and small businesses
^-^^-^^i^^i^QlillAccessPrp^ram shall use the “Medimt Rnr.. model in which a primam rare !
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physician, nurse practitioner^ prjphysician assistant develop nr,A At...,
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a. plan ofcare for each Henlth j
^^^^FilProgrmj2micipant. coordinate referrals fn,- iminzandspHcialpLservices. andmnnOn,i
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management ofchrome conditions and dh-^n^^c
Access Program
^'^i^^^MdhAccesiProgr^
Participantjoa primary care, nhysician
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practitioner, or physician assistnm
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Supervisors Ammiano, Daly, Mirkarimi Dufty, Ma, McGoldrick, Maxv/ell, Peskin
board OF SUPERVISORS
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[jl.. The Health Access ProsTam shall providp. medical services with an emphasis on wellnps^-
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delivery. TheProsTagsLall,ro,id. m^dicn,
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cosmetic, and outpatimt mental hpnhh
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^^^^^i^^^^-IhePe^rtment ofPublic Health mav further
the^yices to be provided, except that curb services wv., at a minimum, include: vrofe.ssinnnl
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medical services bv dnrtm-
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providers, includine Dreve.ntive
^^JmMM.actitioners,,MhMcima^ants, and other liccr.^ri h..uu care
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jaimarv. diaMc mdspecial^: mes:
hospital services, indudins acute Innmient mental h„alih sm:r„,■ dia^ostic and laboratory services.
including- therapeutic radinloviml
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^^rmeKMmirnQnAugs^exch^dru^ for excM c.,
tmme health care; and emergency care provided i
UlScmFranciscohy contracted providers irrhi^itaa
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mer^enev medical transportation ifno.>rt,art
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The Health Access Progmm shall offer the
opportunity for employers to enroll their
■mP^y£^ md:for,:iMmdnatei7raltnenti7v :-Julv I mm
j... .
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SEC. 14.^.
-
required JfEALTH CARE EXPENmrnp fc
Required Expenditures. Covered employers rhnll m ake required health care exnPrHitt,yp>P
on behalf of their covered emplnyees each
!mlth care expenditures made hv
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dm:Mi,-Jhe^itYCmiMei: shall maintain any required
anemployer to theCipijepgratejmd^art from general fvrtrtp and
The rertmr., U..UU
mmdemplgyer_shgLl.be calculated hv mr,Jtinh,;.rr
mmdmslQymdunng_die_quarter (including nnh,
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mmhjollpwin^ ninety (90) calendar dnv, nfmt^
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heglth_care expenditure rate. In determiniy^a ^th.tu.,.
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care expenditures, payments m
or
a
iQmLmmh^r.of hours paid for alt nfit,
—--Morlingmjhe first day of the mlpnrln,-
coveredem ployee's date of hire) hv thp
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gcoveredemployer has made, its required hpnttu
on behalf of a coyeredjemglgyeg shall not be considered ifthtas,
exceedJhe following amount: the number of hours naid fnr ,ho
multiplied bv the applicahle health
care exnenditurr in r n
covered employee durinv thp
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Quarter
sms expenditure rale . Ths CioPs nff,r,e „f Labor RioosWr,,
rniLscmml (OW .shqnen{orcsjhs_heal,h sspsndUure ,-eou'„„,so„
,..v
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loARD OF S™KV°,S0RS
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Employpr ResonmihiUti^^
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records ofhp.nlth
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-Acgmed employer siigU: (i) mainiaiy,
mre^nendilures. required health
made each auartp.r pnrh
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lojuchrecpr^ provided
ihaLcoyered ern^lp^^s shall not he required tn maintain such re.cnrrh in
i any particular form: and fu)
provide a report to the administering ni
or the OLSE's desimep
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such other information as OLRF ^hnli,
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information in violntinr,
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^^^^^^^^^^^amerecgrd^documentinfr thp ha^hu
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^^^^^-mmditureLMndproofofsuch expe^dhu^.o
Yeqnmdallow OLSE re.o^nnnhlo access
on
gnamual basis cnntniy,iy,r,
to nrnviH.
or
imsongble access to surh records
federal privacy laws Wh^i-a
an employer does not mnimni^ or
mendUurennad^r does not allnu, nr cr
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iLshall he presiirmd that the emplm,Pr rtirt not make the required
b^^MhME§ndituresfor the quarter far
and convincing
^^ddmceMienvise^n^
ofTrea.nr.r and Tax Collector shall have the authnrtn,
to provide any
md all-information 4onJ Stir
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to iulm the nrsF'n:eMmLkm,ies as the.
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-^^^^^3TLE]mciscpBusiness_^ Tax Regulations Cod.
SEC. 14.4
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administration AND ENFORCEMENT
(^^-^Si&-D^EmnmMEMic Health shall d^.,.lnr.mdmrpmulfpate rules tn govern th,^
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QMmionofthe Health Arr^..
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the_enfQrcement ofthe^hlizations ofemnlnver,mderAhisChapter. The rules shall nhn
establish
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procures for covered
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pequired health care
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information that wnuht
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procedures for vrovidincr emnlover,
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ram
The_ OLSE shall develop and promulgate rules to provide for
to. maintain accurate records ofhp.nlth care expenditures and
expenditures and provide report to the CitYJvithout requirins any disdn^nr^. r.r
meorjederal privacpdam^.The rules shall
establish
notice that they may have violated this C.hnptr>
to.the notice, a procedure for nntifimti Qf.the finaldetermination ofa vinJnfiny,
arUtht to respond
ion
.and an apnenl
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^_.The sole means ofreview ofth^.24
hearimy officer's decision shall be bv filinv mJhe_Sanfyancisco Superior Court
gjpetilion for a Mmit nf
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Supervisors Ammiano, Dai
y, Mirkarimi, Dufty, Ma, McGoldrick, Maxwell, Peskin
BOARD OF SUPERVISORS
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mandate under Section 1094.5 ofthe California CnHn nfr
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finally until after a public hearintr
ml Procedure. No rules shall he adnniprl
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implementation ofthis Chapter
maintain an education and advir.p
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on an
mmnft basis thereafter, the Cit^, i-hnil
MP-gnam to as^^st employers with meeting the requirements ofthiv
Chapter.
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(dLAm_ employer thgir^es the number ofr.nv.redenmlnv.e y beloy: the number that would
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have resulted in the employer hein? considered a ‘m‘ ^ered employer. ” or below the number thm u,n„u
have resulted in the employer heAnxr considered amdiuntsiMdpr lar^e business, shall demn^.r.nr.
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that such reduction
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inyiolation ofthe ChnptPr
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was
notdonejgr the purpose ofemdirmthe oblisations ofthl, Chnpin.or shall he
fi shall be unlawful f<or
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gny employer or coveredmplover to deprive, nr thr.n,.^ deprive
m&mimmm>mmm>^crthrea,,rrt^,ake mmmioammamkmmaim
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any
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Pommand orinfluence or attempt in
or
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<a!SrmSU>mmmMUnmmkm.lo enforce. i^SSMhout^„
eltblsaumaUMmZadsr^acH^^ af,an„a^,„n„ m,Hin mnm m,
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of,h,.
,resu„„io„
so
WJimlmonjQUhe exercise nf.'ojrh Hohu-
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and covered
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Chapter and may impose administrative, penniti^. mpnemployers and covered employers whn vintm.
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this Chapter, including the r
mutemenlJ that businesses allow the City reasonable access to records nf \
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healthexpenditures. as follows: the, nmnum ..f
foonScancLpnechalftimes the total expenrlia,...
cohered employer failed to make plus .dmple n^^uni
—- interest ofup to ten (10) percent from the date
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a
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payment should have been made
to The City Controller shall
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mr mrt on impdementatipn ofthe Health Acce.ss P,-ogram.
including participation rnie^
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and
o„,He .canon,,.
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Chapter, to the BnnM ofSupervisor., on tuuemdy baste through the e„rl of tnno
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on an ann ual
supTb”,sots"'*""''
Pages :
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^^SsmgJhnmpknMionnfjhisChmeLjRW
ennsors shall hnl^ n
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to
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r^,
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rates; desi^nma th.rmse ofbenefits nnd h^nhh
j^iiMmicinms^d researching^ utilhntin.
‘
care servirpv
actuaries, and costs'
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■and for
.“Tf^e^iS^fflfiBite^ilJaamalofflra^^ ,hi.
er
■.rpp
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competent servir.pg
SEC. 14.5. SEVERARn.TTV
If-MmLAection. suhse.c.tinr,^
Ehrase^Jiazortion of this Chapter i, f^. any reason hpJrt
inmlidpr unconstitutinnnl hy any court or fedeml
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^EMmagma^Mcmpetent iurisdintinn ,„rt,
mriion shall he dp.Pmpr^ a
and such hnldi.o .h.ii ...
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affect the validity nfihp
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be deemed severnhJp
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SEC.14.6. PREEMPTiniv
^^Ofhim in this Chapter ..-hnU hn i^dEmmM..or applied sojii_to create any power
obligation in conflir.t -unth
or
^^EJWnmdby, any federal nr .mto la^,.
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SEC.14.7. GENERAL WF.T.F4Rrr
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Supervisors Ammiano, Daiy, Mirkarimi Dufty, Ma, McGoidrick, Maxwell, Peskin
board OF SUPERVISORS
Page 9
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is assuming an m^ertakirm only to promote the ^P.r,Prnl welfare and
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Otherwi^atis^ its ohUmtions to provide health care under avnlicnhlp In^, This C.hnptershould in
no wav be construed hk
an
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mansion of the atv‘s_existin^ obligations to provide health m m under
state and federal lawK and the City .■^hnll set all
necessary criteria for enrollment consist ent with iis
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le^al obligations. The City is not assuming, nor is it impr,‘tir,o on its officers and emnlnvpp
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oblivion for breach of which it is liable in money dnmna,. tn any mrson
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who claims that such br each
ElWmehcauMdJnjury^ the fullest extent permitted by law, the City shall nc.ur.. ... /,v.a.-,.,.
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■V, an
by a ouhlic nffrrr n.
undeuheM^isions of this Chapter shall not becom^ersonal liability nfn.. n,.A;,v .re,.,,
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r or
employee of the Citv.
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SEC. 14.8. OPERATTVF BATV
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.Sh&Jgy thisEhgpter becomes p ffprih,^^
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lMP^PPosi^m:md:tirrv fd(mfemerits n n:" -
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mediMm^medogarMj^^
,
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Jm!v1J007. Any requirenimm on medium-sized
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employees shall become operative on January I. 2(m Thic Chanter i *
is intended to have prospective
or more cnvererl
effect only.
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APPROVED AS TO FORM'
DENNIS J. HERRERA, City Attorney
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By:
ALEETA M. VAN RUNKLE
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onTr'o
Ammiano, Daly, Mirkarimi, Dufty, Ma, McGoldrick, Maxwell Peskin
BOARD OF SUPERVISORS
Page 10
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7/6/2006
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FILE NO.
LEGISLATIVE DIGFST
[San Francisco Health Care Security Ordinance]
Francisco Administrative Code to add Chapter 14,
Ser«nn= LTr
brccreating
0^00 ajaublic
a ouSelhh’
residents
Dy
health access program for the uninsured, requiring emolover
oaid
exDLnd1tures'^c'''^^•’
operative d?te
an employer may make such ^
"®
^^Fess working group, and setting
an
Existing Law
Exis mg law does not require that licensed businesses operating within San Francisco make
health care expenditures on behalf of their employees. Local law does require that certain
City contractors and lessors of City land comply with the Health Care Accountability
the Administrative Code, by choosing to pay a fee to the City to
offset the cost of the ■^20
City of
s provision
of health care to the uninsured and underinsured ^
populations, or by providing health care coverage to covered employees.
There are no existing local provisions on the Health Access Program.
Amendments to Current Law
The proposed measure entitled the "San Francisco Health Care Security Ordinance" will
amend the San Francisco Administrative Code by adding Sections 14.1 through 14 8 The
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measure combines the proposed legislation creating the Health Access Program with the
proposed Worker Health Care Security Ordinance.
A. The Health Access Program
The San Francisco Health Care Security Ordinance creates a public health program to
provide a set of health benefits for uninsured San Franciscans. The San Francisco
Department of Public Health will create and oversee the Program, which be called the San
plan for participants. Under the Program, uninsured
Francisco residents may obtain
medica care including, but not limited to, services in San
the areas of preventive, primary and
specialty care, as well as urgent and emergency care, from a network consisting of San
profiTproviSrs^''^' Hospital, the Department of Public Health's clinics, and community nonThe Health Access Program will be open to uninsured
San Francisco residents, regardless of
employment or immigration status, who are otherwise eligible
for services. No eliq^e
participant shall be excluded from the Program based on a pre-existing condition.
BOARD OF SUPERVISORS
Page 1
7/7/2006
cAdocume''1\vvouna\locals~Utf>mn\nntBc4'nhan\hithT4 a.,.-
FILE NO.
The Program will provide participants with medical care, with an emphasis on wellness and
preventative care. The available benefits may include laboratory, inpatient hospitalization xray, elective surgery, and pharmaceuticals. All participants shall be eligible for the same ’
benefits and health care services.
The Program may be funded from a variety of sources, including payments from participating
employers that are satisfying the health expenditure requirement, individuals, and the City and
County of San Francisco. City funding shall prioritize Program services for low income
participants, and shall subsidize where possible, participation by businesses with fewer than
one hundred (100) employees.
A third-party vendor, in coordination with the Department of Public Health, will administer
program operations, including basic customer services, enrollment, tracking service
utilizations, billing, and communication with the participants.
Under the proposed legislation, the Director of Public Health shall convene an advisory Health
Access Working Group to provide the Department of Public Health and the Health Access
Program with expert consultation and direction. The Mayor and Board of Supervisors shall
have input on members selected for the Working Group. The Health Access Working Group
shall be advisory in nature and may provide the Health Access Program with input on matters
including: setting membership rates; designing the range of benefits and health care services
for participants; and researching utilization, actuaries, and costs.
The Health Access Program shall offer the opportunity for employers to enroll their employees
and for individual enrollment by July 1,2007.
B. Employer Health Expenditures
The measure requires that employers engaging in business within San Francisco, that are
required to obtain a valid San Francisco business registration certificate from the San
Francisco Tax Collector’s office, or an employing unit as defined in the California Labor and
Unemployment Codes, with a minimum of twenty (20) covered employees, or in the case of a
nonprofit corporation, fifty (50) or more covered employees, make health expenditures on
behalf of employees. The expenditures shall be made on a quarterly basis and will be
required after an employee has been paid for ninety (90) days. The measure also sets
penalties and provides for enforcement by the City's Office of Labor Standards Enforcement
(OLSE).
Under the measure,"Health Care Expenditure" means any amount paid by a covered
employer to its covered employees or to another party on behalf of its covered employees for
the purpose of providing health care services for covered employees or reimbursing the cost
of such services for its employees, including, but not limited to:
(a) contributions by such employer on behalf of its covered employees to a health savings
account as defined under section 223 of the United States Internal Revenue Code or to
any other account having substantially the same purpose or effect, without regard to
BOARD OF SUPERVISORS
Page 2
7/7/2006
c;\docume~1\vyoung\locals~1\temp\notes433be0\hlth7d.doc
FILE NO.
whefter such contributions qualify for a tax deduction or are excludable from employee
(b) reimbursement by such employer to its covered employees for incurred health care
expenses,
(c) payments by an employer to a third party for the purpose of providing health
care
services for covered employees,
(d) costs incurred by an employer in the direct delivery of health care services for covered
employees, and
(e) payments by an employer to the City to fund health services for uninsured San Francisco
residents, including employees.
Notwithstanding any other provision of this subsection, such term shall not include any
payment made directly or indirectly for workers' compensation, the Civilian Health and
Medical Program of the Uniformed Services, or Medicare benefits.
Employer' shall mean an employing unit as defined in Section 135 of the California
Unemployment Insurance Code, or a person as defined in Section 18 of the California Labor
Code, including all members of a controlled group of corporations. A "controlled group of
corporations
shallthan
have50thepercent"
meaningshall
given
Section 1563(a) of the Internal Revenue Code
except
that more
be insubstituted
for "at least 80 percent" wherever
such term appears in Section 1563(a)(1) of the Internal Revenue Code and the determination
shall
be made without regard to Sections 1563(a)(4) and 1563(e)(3)(C) of the Internal
Revenue Code.
The measure does not include within the definition of"Covered employees" those employees
subject to the Health Care Accountability Ordinance, Chapter 12Q of the San Francisco
Administrative Code.
For medium-sized businesses employing between 20 and 99 employees, the required
expenditure would be 50 percent of the ten-county survey rate used to set health care
contributions for City employees. For large business employers with 100 or more employees
the required expenditure rate would be 75 percent of the ten-county survey rate.
expenditure for a covered employer shall be calculated by
multiplying the total number of hours for which its covered employees were paid durinq the
quarter (including only hours starting on the first day of the calendar month following ninety
(90) calendar days after a covered employee's date of hire) by the applicable health care
expenditure rate. In determining whether a covered employer has made its required health
care expenditures, payments to or on behalf of a covered employee shall not be considered if
they exceed the number of hours for which the employee was paid during the quarter
multiplied by the applicable health care expenditure rate.
Proposed amendments include: revising the effective date for participation in the Health
the City Controller shall maintain any
required health care expenditures made by an employer to the City separate from the general
BOARD OF SUPERVISORS
Page 3
7/7/2006
c;\docume~1\vyoung\locals~1 \lemp\notes433be0\hlth7d.doc
FILE NO.
funds; and the City shall maintain an education and advice program to assist employers with
meeting the requirements of the measure.
Addihonal reporting obligations are proposed in the amended measure; the Controller shall
u
Supervisors on a quarterly basis on the implementation and effect of the
Health Access Program and the Health Expenditure requirements. The City Controller shall
also report within sixty (60) days after any significant event affecting the implementation of the
measure, in which case the Board of Supervisors shall hold a hearing within thirty (30) days of
receiving the report to consider responsive action. The Department of Public Health and the
OLSE shall report to the Board of Supervisors by January 31,2007, on the development of
rules for the Health Access Program and for the enforcement and administration of the
employer obligations under this Chapter. The Board of Supervisors shall hold a hearing on
the proposed rules to ensure that participants in the Health Access Program shall have
access to high quality and culturally competent services.
The measure shall become operative in three phases. The day this Chapter becomes
effective, implemen ation of the Chapter shall commence. The Health Access Program and
any requiremen s placed on medium-sized or large businesses with fifty (50) or more covered
requirements placed on medium-
i
covered employees shall become operative on
January 1, 2008. This Chapter is intended to have prospective effect only.
Background Information
All San Francisco residents should have quality, affordable health care. Currently,
approximately 82,000 adult San Francisco residents are uninsured, even though more than
half of those individuals are employed. San Francisco taxpayers bear the cost of paying for
emergency room visits and other unnecessarily expensive health care for the uninsured By
establishing a Health Access Program for uninsured San Francisco residents with an
emphasis on preventive care, and by requiring businesses to make reasonable health care
expenditures on behalf of their employees depending on the businesses’ ability to pay the
burden on San Francisco taxpayers for providing health care for the uninsured can be’
reduced. At the same time, San Francisco can offer uninsured individuals the choice to enroll
in a system that provides quality health care for an affordable price and offer employers the
choice to enroll their employees in that system. San Francisco also has a vital interest in
preventing a race to the bottom" in which employers stop paying for employee health care to
remain competitive and instead shift those costs to San Francisco taxpayers.
BOARD OF SUPERVISORS
Page 4
7/7/2006
c;\docume~1\vyoungMocais~1 \temp\notes433bea\hlth7d.doc
Memo to Budget and Fiucince Committee
July 11. 2006 Special Budget and Finance Committee Meeting
Item 4- File 05-1910
Note:Tl,e proposed Amendment of the Whole (see Descnpt.on section below) was
continued at the July n, 2006, meeting of the Budget and Finance Committee.
Department:
Department of Administrative Services -
Office of Labor Standards Enforcement(OLSE)
Department of Public Health(DPH)
Office of the Controller -
Office of Economic Analysis
Item;
Ordinance amending the San Francisco Administrative
Code by adding Sections 14.1 through 14.8, to provide
hea th care to San Francisco residents by (a) creating a
public health access program for uninsured San Francisco
residents, (b) requiring that employers doing business in
ban Irancisco, employing at least 20 employees make
health care expenditures on behalf of their employees;(c)
identifying options for how an employer may make such
expenditures; (d) creating an advisory health
working group; and,(e) setting an operative date.
Description:
access
The proposed ordinance is an Amendment of the 'i^fiiole
merging two proposed ordinances. File 06-1919 and File
06.0893 into one File 05.1919. The Budget Analyst’s
report below is unchanged with respect to the original
report on File 05-1919, the “Worker Health Care Security
Ordinance,” and has added one Comment with respect to
BOARD_QF SUPERVTSOR.q
BUDGET ANALYST
1 Q
Memo to Budget and Finance Committee
July 11, 2006 Special Budget and Finance Committee Meeting
the original report on File 06-0893, the “San Francisco
Health Access Program,”
Description of the
Original File 05-1919: The proposed ordinance would require that employers
operating within San Francisco who employ at least 20
employees, or nonprofit agencies who employ at least 60
employees, to make health care expenditures on behalf of
their employees for the purpose of either (a) providing
health care coverage to such employees or (b) reimbursing
the cost of health care for such employees. The proposed
ordinance would authorize “health care expenditures” to
include expenditures by covered employers for their
employees for (a) health savings accounts, (b)
reimbursement of health care costs incurred by covered
employees, (c) payments to a third party for the purpose
of providing health care services, (d) costs incurred by
an
employer m the direct delivery of health care services to
covered employees, and (e) payments by an employer to
the City to fund health services for uninsured San
Francisco residents.
Required Health Care Expenditures bv Employers
The , proposed ordinance would require all “covered
employers^^^ to make health care expenditures for “covered
employees at a rate equal to (a) 75 percent for covered
employers
employing 100 or i^ore covered employees, and
_
(b) 50 percent for covered employers employing between
20 and 99 covered employees and covered nonprofit
agencies employing between 50 and 99 covered
employees. The rate to be paid to provide for employee
' P^°P°sed ordinance defines a “covered employer” as “any medium or large business las defined
within the proposed ordinance] operating within the
Francisco business license from the San Francisco Tax City that is required to obtain a valid San
Collector’s Office, or, in the case of a nonproS
corporation, a busmess with a minimum of fifty (50) covered employees.”
ordinance defines “covered employee” to mean anyone
who has performed at least two
hours of work per week over a period of ninety days for a covered employer,
provided however that
L^nlT''
managerial,
supervisorial,
or confidential
employees, unless such employees earn annuaUy under $72,450 or in 2007 and for subsequent
he figure as set by the OLSE. The proposed ordinance further states that “covered employees”years
will
not include employees covered under the City’s Health
Care Accountabilitv Ordinance
^ 1 he p roposed ordinance further authorizes that any businesses that
are part of a larger corporation
which has a controlled share of 50
1
f .u
.,
percent or more of such businesses will be considered as on-
employer for the purposes of this ordinance. For example, if a corporation has three franchises with
oO covered employees each and has a controlled share of more than 50 percent for each of the three
franchises, then all three franchises would be considered
as
one employer with 150 employees,
Therefore, each of the three franchises would be required to provide
health care expenditures at a
BOARD OF SUPERVT,BOT?q
BUDGF^ ANALYST
1 /.
Memo to Budget and Finance Committee
July 11, 2006 Special Budget and Finance Committee Meeting
health
^
care services shall be at the average contribution
rate approved by the Board of Supervisors based on the
Citys Health Service System annual ten-county survev
amount for the applicable fiscal year and paid by the City
2007"^^
System, which in FY 2006-
is $36o.66 per month, or approximately $4,388
annually.
The Budget Analyst calculates that under the proposed
ordinance, the health care expenditure rate to be paid by
coveijd employees for each full-time covered employee
n
$274.25 per month (75 percent of $365.66)
per lull-time covered employee, or approximately $3,291
annually, for covered employers employing
100 or more
covered employees; and (b) $182 83 per month (50 percent
of
$365.66)
,
per
full-time
covered
employee,
or
approximately $2,194 annually, for covered emplovere
employing between 20 and 99 covered employees and
covered nonprofit agencies employing between 50 and 99
covered employees.
The proposed ordinance would
expenditure rate
prorate the health
care
on
an hourly basis, dividing the monthly
average expenditure rate by 172 hours per covered
employee and multiplying by the actual number of hours
worked by all covered employees. For example, if a
covered employee of a covered employer worked 86 hours
health care expenditure rate to
be paid by the covered employer would be one-half of the
full-time covered employee amount above
or $137.13 (50
percent of $274.25) if the covered employer employs 100
or
more covered employees.
The proposed ordinance would further prohibit
an
emp oyer from (a) reducing the number of covered
employees or (b) reducing the number of employees who
perform compensated work for such employers, for the
purpose of evading the obligations of this proposL
ordinance. Under the proposed ordinance, the employer
be responsible to demonstrate that any reduction in
rate of 75 percent (and not 50 percent, as would be the case for
—
annual ten-county survey.
99 employees) of the average
S-P™- baJed on upthetoCity’s
Health Service System’s
board OFSUPFiRVTcinpQ
BUDGET ANALYST
1 q
Memo to Budget and Finance Committee
July 11, 2006 Special Budget and Fina nee Committee Meeting
the number of covered employees was not done in order to
evade the obligations of the proposed ordinance.
Covered
employers
would
be
responsible
for (a)
maintaining accurate records of health care expenditures
and proof of such expenditures made each quarter, and (b)
providing
an annual report to the
.
Department of
Administrative Services Office of Labor
Standards
Enforcement (OLSE) containing information, as required
by OLSE, regarding the employers’ compliance with the
proposed ordinance.
Proiected Enforcement Costs t.n the OLSE
The OLSE would be responsible for enforcement of '
the
proposed ordinance, including (a) review of the annua^l
reports and annual records of health care expenditures
submitted by all covered employers subject to the
provisions of the proposed ordinance; (b) notification
to
the employer of violation of the provisions of the proposed
ordinance, the required corrective action, and amount of
penalties that may be imposed (the penalty amount may
be up to one and one-half times the total expenditures
that the employer failed to make); (c) handling of appeals
by employers who OLSE has determined to be in violation
ol the proposed ordinance; and, (d) investigation of
complaints submitted by covered employees whose
employers do not provide health care benefits or funding
for health care expenditures.
The Attachment is
a memorandum from Ms. Donna
Levitt of the OLSE which states that OLSE estimates the
total costs for enforcement of the proposed ordinance,
including staffing and mailing costs, would be $450 000
annually.
Additionally,'
Ms. Levitt estimates one-time
.
,,
costs incurred by OLSE for enforcement of the proposed
ordinance at $30,000. According to Ms. Levitt, such funds
to cover the enforcement costs will be included in a future
budget request by OLSE. Ms. Levitt advises that total
enforcement costs may change over time as OLSE is
better
, able^to determine appropriate staffing and supplv
costs. The Budget Analyst will review any future budget
reqimst, including funding sources, which is submitted to
the Board of Supervisors.
BOARD OF SUPERVTSOPQ
BUDGET ANALYST
1 c.
Memo to Budget and Finance Committee
July 11, 2006 Special Budget and Finance Committee Meeting
Description of the
Original File 06-0893:
The proposed ordinance would direct the Department of
Public Health (DPH) to create and oversee a San
francisco
Health Access Program (HAP) which would
provide medical
services to uninsured San Francisco
residents for the prevention, diagnosis, and treatment of
medical conditions, excluding vision, dental, cosmetic and
outpatient mental health services.
As stated in Section 19.4 of the proposed ordinance, the
p^roposed HAP would be a “partnership between the
Department of Public Health and various private and
public entities. It may be funded from a variety of sources,
including payments from employers and individuals, and
the City and County of San Francisco. City fundin'^ shall
prioritize Program services for low and moderate income
participants, and will subsidize where possible,
participation by businesses with fewer than one hundred
(100) employees.” The Budget Analyst notes, however
that the proposed ordinance (a) does not specify any
mechanisms for implementation and administration .f
of
the proposed HAP and (b) does not specify.'any funding
sources for the proposed HAP (see Comment No 1)
Dr. Mitch Katz, Director of DPH, advises that total
estimated costs of the proposed HAP
approximately $198,030,000 annuaUy,
would
which
be
DPH
calculates using an estimate' of $201.25 cost per HAP
member per month, or $2,415 annually, and including an
estimated 82,000 uninsured San Francisco residents who
would be members in the proposed HAP.
Of this estimated $198,030,000 total annual program cost
for 82,000 members. Dr. Katz advises that DPH estimates
potential funding sources would total an estimated
$200,000,000 to $229,000,000 annually. The potential
funding
sources shown in the table below were provided
by Dr. Katz,
was
BOARD OF SUPERVTSOfi.q
BUDGET ANALYST
T -7
Memo to Budget and Fmcnce Committee
July 11, 2006 Special Budget and Finance Committee Meeting
Potential Funding Source
Estimated Annual Amount
City’s Contribution
Employers’ Contributions
$104,000.000
30,000,000-49,000,000
Individual Enrollment Copay Contributions
Federal and State Programs
Total
56,256,000
10,000,000 - 20,000.000
$200,256,000 - $229.256.000
With respect to the City’s contribution amount of
$104,000,000 above. Dr. Katz advises that DPH has based
this estimate on total costs which DPH expended in FY
.
2004-2005 to provide medical services to uninsured San
Francisco residents. All such City costs will be subject to
appropriation approval by the Board of Supervisors.
With respect to the employers’ contributions estimate of
$30,000,000 to $49,000,000 above, the Budget Analyst
notes that this range of estimated funds is based on a
report prepared by the Controller’s Office of Economic
Analysis on the original File 05-1919, which would
require covered San Francisco employers to make health
care contributions on behalf of their covered employees
The Budget Analyst notes that, while covered San
Francisco employers would be required to make health
care contributions on behalf of their covered employees
such employer contributions would not necessarily accrue
to the proposed HAP. The Budget Analyst further notes
that the estimated amount of $30,000,000 to $49 000 000
IS the ControUer’s total estimate of employer health care
contributions which would be realized under Section
14.1(b)(5) of the proposed Amendment of the Whole. Such
health care contributions could include:
(a) Contributions by such employer on behalf of its
covered employees to a health savings accountlb) Reimbursement by such employer to its covered
employees for expenses incurred in the purchase
of health care services;
(c) Payments by an employer to a third party for
the purpose of providing health care services for
covered employees;
(d) Costs incurred by an employer in the direct
delivery of health care services for covered
employees; and.
board of SUPERVT.SOPC^
BUDGET ANALYST
18
Memo to Budget and Finance Committee
July IF 2006 Special Budget and Finance Committee Meeting
(e) Payments be an employer to the City to fund
health services for uninsured San Francisco
residents (the proposed HAP program, File 060893).
The Budget Analyst notes that, based on the Controller’
s
Office of Economic Analysis estimates, the proposed HAP
mcludes an identified funding source in the Employers’
Health Care Contributions estimate of $30,000 000 to
$49,000,000 which could be expended by employers
any one or combination of five different options and
on
not
necessarily accrue to the proposed PIAP. Therefore, under
the
proposed HAP, employers could contribute nothing^ to
RA.P.
With respect to the Individual Copay Contributions
estimate of $56,256,000 above, the basis for such estimate
IS shown in the table below, provided by Dr. Katz.
Income Level of Uninsured
San Francisco Residents*
Less than 200%
Individual
Enrollment
Copay
$3 per month
$35 per month
$200 per month
Estimated
Size of
Population
Estimated
Annual
Revenue
31,000
$1,116,000
17,000
7,140,000
20,000
48,000,000
68,000**
*Income level is defined
a£.a percentage amount of the Federal Poverty Lilie.
$56,256,000
Between 200% and 500%
Greater than 500%
Total
*ie
Dt. Katz advises that the estmi^d size of the population of 68,000 paving the Individual
Enrollment
Copay is 14,000 less than the estimated 82.000 uninsur;d San Franmsco ^Snts
rmnm"*
2 residents
fwould have theirProposed
HAPexpenditures
because DPH estimates approximately 14 000
uninsured
health
care
paid by their employrs uMer tSe
proposed ordinance and therefore would not pay an Individual Enrollment
Copav.
The Budget Analyst notes that, m its calculation of
$104,000,000 in City Contributions by DPH for uninsured
patients in FA' 2004-2005, DPH further estimated total
collections from uninsured patients to be $2,151,000,
which IS $54,105,000, or 96.2 percent less than the above
estimated Individual Enrollment Copay annual revenues
of $o6,256,000. Under the proposed HAP, patients would
be required to pay Individual Enrollment Copay
based on the individual’s income as a percentage of the
contributions in the amounts specified above, determined
board of SUPERVTSOR.q
BUDGET ANALYST
1 Q
Memo to Budget and Finance Committee
July 11, 2006 Special Budget and Finance Committee Meeting
Federal Poverty Line (FPL).-^ Further, Dr. Katz advises
that DPH anticipates that individuals with incomes which
are greater than 300 percent of the FPL will be the last to
be enrolled in the proposed San Francisco Health Access
Program (HAP).
With respect to the Federal and State estimated funding
source of $10,000,000 to $20,000,000 for the proposed
HAP, Dr. Katz advises that the availability of such funds
will depend on (a) the level of experience of service
providers and their ability and capacity to leverage MediCal funds and (b) future modifications in State and
Federal law which may reduce or increase the total
amount of such funds available to DPH to
:
fund the
proposed HAP. Dr. Katz advises that DPH collected
$22,325,603 in such monies in Calendar Year 2004 to
provide medical services to uninsured San Francisco
residents.
Comments:
1. At the July 5, 2006 meeting of the Budget and Finance
Committee, the proposed ordinance was amended by the
Committee to require DPH and OLSE to report to the
Board of Supervisors by January 31, 2007 on the
development of specific rules to be formulated for the
proposed HAP and for the enforcement and
administration of employer obligations under the
proposed ordinance.
2. The Budget Analyst notes that the proposed ordinance
funding source of $56,256,000 in annual Individual
Enrollment Copay contributions is $54,105,000, or 96 2
percent more than the total estimated collertions of
$2,151,000 from uninsured patients utilizing San
Francisco City health facilities in FY 2004-2005. Further,
as shown in the table on the previous page, $48,000 000
or 85.3 percent of the Individual Enrollment Copay
contributions, would be collected from 20,000 patients
each contributing $200 per month. Dr. Katz advises that
should these patients not participate m the proposed
l^P, DPH would not incur costs for such patients and,
therefore, DPH would not need the Individual Enrollment
Copay contribution revenues from such patients.
“ In F5 2005-2006, the Federal Poverty Line for an individual was annual income of $9,800.
board OF SUPERVTROTf q
BUDGET ANALYST
20
Memo to Budget and Fin<unce Committee
July 11. 2006 Special Budget and Finance Committee Meeting
Recommendation:
Approval of the proposed ordinance is a policy matter for
the Board of Supervisors.
arvey M. Rose
cc: Supervisor Daly
Supervisor Dufty
President Peskin
Supervisor Elsbernd
Supervisor Mirkarimi
Supervisor Alioto-Pier
Supervisor Ammiano
Supervisor Ma
Supervisor Maxwell
Supervisor McGoldrick
Supervisor Sandoval
Clerk of the Board
Controller
Noelle Simmons
Cheryl Adams
BO^D of SUPERVTSOH.q
BUDGET ANALYST
21
CIT''AND COUNTY OF SAN FRANCi
Attachmer
T
GAVIN NEWSOM, MAYOR
DEPARTMENT OF ADMINISTRATIVE SERVICES
OFFICE OF LABOR STANDARDS ENFORCEMENT
Donna Levitt, Manager
1
MEMORANDUM
Date;
To:
From:
Re:
January 27, 2006
Luke Klipp, Office of the Budget Analyst
Donna Levitt
Enforcemenl of the Worker Health Care Security Ordinance
The proposed Worker Health Care Security
, ,Ordinance designates the Office of Labor
Standards Enforcement(OLSE)as the administering
agency,
Functions to be performed by OLSE include •
- develop a procedure and mechanism for the filing of annual renorts
review compliance with the annual reporting requirement
■ assTsse?"^
-eded and any pen^tS^X may be
- monitor compliance with corrective action needed
- defend OLSE findings through the appeal hearing process
- support the Task Force on the health security fee
LSE may promulgate rules necessary for implementation of the ordinance
Based on information from the Tax Collector's Office OLSE assumes that approximately 4000
businesses in San Francisco employ 20 or more people and are covered by the ordinance.
Based on available information, OLSE
enforce the ordinance :
proposes the following staffing and annual budget to
^ ETE 2978 Contract Compliance Officer II
130,000
200,000
70,000
50,000
450,000
2 FTE 2992 Contract Comolianr.P Offiror i
1 FTE 1446 Secretary II
Annual mailing to registered h77.c;inE.QQor~
Total
Computers / phones / office space (one time expensed
City Hall, Room 430 1 Dr. Carlton B. Goodlett Plar-o
22
To) f/H c\ CCA
rs
30,000
J±-
’ ft ■«
Office of Economic Analysis
Economic Impact Report
Worker Healrh^e'Sity Ordinance
File Description;
proven,,ere„l„rce^„?3j
Proposed Ordinance Sumrpary;
ImpaS
with more lhan 19 employees
Mandaleso miFor
nimFor-Profit
um heallhBusinesses
care e^^^Xr
'LTca'io'i’ri'JL''
with overi o «
50% times the City’s Annual 10-Countv
Py 1. nours kmea me
®
"
formula:
employees-
1 “-County He®m'su“erRate°(a"o„°^^^^
“o«s the Cily's Annual
o Fo"Nt°P,re:si„?r3^s^^^^^
di"~;f B--vrnT„form^r
as
employees the
June 23, 2006
Page lone
Executive Summary
While the majority of San Franciscans benefit from health insurance coverage, an estimated
82,000 to 148,000 go uninsured for at least some period of time during the year. Lack of insurance
coverage impacts both residents as well as some non-residents \who commute into San Francisco for
work. The problem of the uninsured is large both nationally and at the state level, where an estimated
one in five Californians are uninsured. This legislation proposes to remedy at least a portion of the
problem at the local level by mandating minimum health care expenditure requirements for San
Francisco-based for-profit covered employers with more than 19 employees working in the city and for
San Francisco-based non-profit covered employers with 50 or more employees working in the city.
Our economic impact analysis projects that an estimated 14,070 to 19,570 people could gain
increased access to health care benefits at an estimated projected cost of $30.9 to $49.0 million in the
first year of coverage. We project that these costs will be'immediately felt by employers and
predominantly by smaller employers with, less than 50 employees, as they currently are jess likely to
offer health benefits to their employees. Over time, however, we project that employees will ultimately
pay, at least part if not all of the cost of these new benefits through otherwise lower wage increases.
Employers operating in a competitive marketplace have limited resource capacity to pay toward
personnel compensation costs (including both wages and fringe benefits). In the short-run, we project
that for some businesses the increased cost of doing business in San Francisco will be greater than is
supportable through price increases or existing profit margins, resulting in estimated losses of between
60 arid 590 full-fifrie jobs. Conversely, 15O‘to'24OTu!l-time heaithcare‘j0bscouid be created if all of the
costs represented increased consumption of health services within San Francisco, assuming no gains
in efficiency in the delivery of healthcare. The combined range in the change in jobs is estimated to be
at the mosi a net gain oi 90 jobs to a potential loss of 350 jobs. This range is relativ'sly minor, as
compared to net job growth in the current economy. As a point of reference, the City experienced
estimated growth of 3,000 to 5,000 net new jobs in 2005, and we project similar job grovirth in the
coming year.
As with any analysis, certain assumptions and survey data were used. A few key limitations or
constraints included:
• limited survey data for the San Francisco jurisdiction with regard to job by establishment
size, so we used the establishment survey data from the California Economic Development
Department even though that data did not disaggregate jobs by part-time, seasonal or full
time;
• limited ability to further project, at a business level, how some specific industries such as
restaurants or temporary services agencies could be uniquely impacted;
• limited ability to quantify the potential positive spillover effects that society may experience
as health benefit coverage rates increase - often cited examples include a more productive,
healthier workforce and savings to the public health safety net;
• uncertainty at an employee level as to how health care expenditures will ultimately be
allocated (e.g. through health savings accounts or insurance with potential co-payment
requirements-)-and-where-that'healtb-care will occur (in San Francisco or outside of our
jurisdiction); and
• uncertainty about what the ultimate composition of resident versus non-resident covered
employees would be.
Given these limitations and unknowns, it seems most helpful to first summarize key risks, then
evaluate the potential impact by stakeholder,
Page 2 of 16
Risk Factor Schedule
Risks
Possible
mitigating actions by local governments
Employers operate in a highly competitive
hirkln^T^"^continually adjust their
hiring decisions based on market wage and
can
•
Consideration of ^
mandated
pass through labor cost increases onto
minimum, or a longer transition time, forspending
smaller
companies as well as
IXt
absorb
significant number of
consumers in the form of higher prices for
"aS to
However
this mandate.
businesses operate with limited
margins, so some business
likely.
profitable industries may help mitigate the ri«;k: nf
many
profit
smaller
Short-,3,“"”’“"^
closures are
Having one jurisdiction with a mandate
tev““tof:o'SaaT"to
loss
for'jobs
costoMSnn^®
increase
the
cost of doing business in San Francisco This
r^T coSld"'
'-set ',ftoe
Thl
f
siir
jurisdiction if other
■ iSSSirS
(CPI)or a regional Labor Cost Index,
Proposed ordinance does not differentiate
r'Sdem
“X
as
can
S
iStl In'"
h r oH .
companies that have
temporary staff and less
non-resident and
•
increasing . health
benefits’“ "for’ non-resident
oyees helps neighboring counties’ public health
subsidizing
neighboring jurisdictions’ public health
needs .
That being said, it may also attract
more
employeespressure
to seek work in the City^ putting
downward
^
®
on wages .
Since a number of smaller businesses
disproportionately have more part-time staff
costs Smi""?
increased
StablishZ
f
establishments survey data suggests.
‘be
The proposed legislation provides a great
deal of potential local remedy for what is a
Z" af'Z'
unknZLSiZesex'St ''™
PflO#» ^ rt C 1 c
P^h,
=%:srh»i“„“^heS
FraadscoslakehelrteraSoocur.
"■
• Consideration of a longer transition time for smaller
part^ me staff may help m,ligate these risks in the short.
Qualitative Net Benefit Ranking
Stakeholder
Description
Extreme
adverse
Moderate
impact
impact
adverse
Neutral
Moderate
favorable
impact
Extreme
positive
impact
City Economy
Covered Employers
NOT Currently
Providing Health Care
Benefits at Mandated
Levels
Covered Employers
Already Paying Health
Care Benefits Above
the Mandated Levels
Covered Employees
.with Health.Care
Benefits Less than
Mandated Levels
-Covered EmplQy.ees
with Health Care
Benefits Above
Mandated Levels
City and County
Government
Page 4 ofie
n ,40
Economic
Effects
If this ordinance passes
Without ordinance
Nearly Neutral Impact:
The Bay Area Economic
i-orum, using data from
t^s ordinance „„ Sa„
M in IhB first yearTfiSeSStr"f't"^economyWide standards is smalfa.; t '
titan ,9 en.ptoyis^llrpSr'"''*"
coverage.
City Economy
the 2003 California
Health Interview Survey
(CHIS)estimated that
in 2003,14^San'
Franciscans were
• Projected 140 to 250
service is provided >unew health care Jobs assuming
uninsured, at some
in San Francisco,
cuti w
employees. ReducSr:?lSv ZJrH^
employees disproportionately
point over a year’s time.
• The San Francisco
Mayor’s Universal
^ ‘ewer-wage
Healthcare Council,
2006,estimated that on
average 82^ persons
were without coverage
per year.
• San Francisco’s
Moderate Adverse Impact-
daytime population is
significantly greater
';5S=E2«=sr,-.
than our resident
due largely
to non-resident workers
commuting into the city
each day. Some of
Covered
Employers NOT
Currently
Providing Health
Care Benefits at
Mandated Levels
Employers with 100 or more employees shall
.
tiealth care expendilOres of nblSi thln^To provide
1
annually
per covered full-time employee^
approximately J,.6 M
Jh rs^S.;)
these workers are
uninsured.
• Using,Metropolitan
Transportation
Commission(MTC)
amp,o^ee^Lt,rSeKXSa"rs'’Sr’^
an amount that exceeds both
’
annually-
proposed mandate levels
currently.
commute pattern
eshmates, total
uninsured resident
(employed and
unemployed)as well as
non-resident
historically the 10-CoLtv
inflation -
7.4% to 8^1o/„ pe?y?aro^erfeStTo 20^years,
compared to an average of 2 5<y fo
the San Francisco Bay Area
°
inflation for
Increase in administrative
health expense records costs as they must maintain
of Labor Standards
compliance.
and report annually to the Office
Enforcement(OLSE)to demorisS
(employed) persons
may total as much as
189,000 over the course
of the year.’
• Employers have been
shifting health benefit
costs onto employees
through increased
deductibles, higher COpayTTients and coinsurance.
per
X 12 months
Page 5 of]6
employees.
per year X# of full-time
^uivalent empJoyees per
Economic Effects
If this ordinance passes
Neutral Impact initially to Moderately Adverse over time.
• No short-term significant impact when employers are spending $2,194
annually per employee, for firms with more than 19 but less than 100
employees, or $3,291 annually per employee, for firms with 1O0 or more
Covered Employers
ALREADY Providing
Health Care Benefits
Above Mandated
Levels
employees.
• Will see some increase in administrative costs as they must maintain
health expense records and report annually to the Office of Labor
Standards Enforcement(OLSE)to demonstrate compliance.
• Potential adverse impact to employers over time if the rate of growth in the
City’s Annual 10-County Health Survey limits the flexibility that employers
have in shifting health costs onto employees through required higher
deductibles, co-insurance and co-payments.
Moderate Favorable Impact;
•
Projected to benefit an estimated 14,070 to 19,570 covered employees
currently uninsured and employed in San Francisco, regardless of
residency.
Covered Employees
with Health care
Benefits Less than
•
Mandated Levels
Incremental benefit per employee (and cost to employer) represents
15.9% to 3.5% of overall total wage costs for firms not currently providing
healWt care benefits, assuming an average wage range of $10.00 to
$30,00-per-hour for.quaiified employees.'*,
•
Depending on the average wage of impacted businesses, we project an
estimated loss of 60 to 590 full-time jobs.
Neutral to Moderately Favorable Over-Time:
Covered Employees
with Health Care
Benefits Above
Mandated Levels
•
Employees expected to continue to benfefit, though employers will now
have a minimum expenditure level that they must provide. This rpay
provide some protection from increased cost shifting, but wilt also likely
otherwise deaease wage growth oyer time.
Neutral to Moderate Favorable Impact:
Reportedly, the ordinance may cost at least $0.48 million in additional ■
costs at the City, primarily at the Office of Labor Standards Enforcement
plus some potentially minor amount of additional operating costs to
Controller’s Office for appeals adjudication.®
Payroll Tax revenues may be impacted depending on the change in jobs.
City & County
Government
Non-profit contracting costs may also be impacted depending on amount
of City funding provided to non-profits to cover incremental costs.
Projected numbers of covered employees who benefit are 14,070 to
19,570 compared to the projected job losses of 60 to 590 (mainly smaller
employers) with potential offsetting new health care jobs of 150 to 240.
Increased coverage may relieve some of the burden on the health safety
net provided by the Public Health Department; however, our assumption
is that these potential savings would be reprogrammed to provide further
unmet public health needs.
‘This range of salary covers hourly wages for most employees who earn at or below the wage median, per recent (Second Quarter, 2005)
Galifomia Employment Development Department Quarteriy Employment and Wages Survey
‘See also the Budget Analyst Fiscal Impact Report on file 05-1919 dated June 1, 2006. Submitted on June 7, 2006.
Page 6 of 16
6/23/2006,12:48 PM
SUMMARY OF
COSTS AND BENEFITS
City Economy
Our office estimates
implementation of this
ordinance
as
currently
°dSd^'Thnstima^fS
colt^t
'"'h
between
$30.9
million
to
$49
0
mNlbn
^^^^ered
mi lion IS projected for City
costs. Primarily related to the Office of Lab^r^stdarSttcemeffi
employers is projected to be
^
™P'°y lower,
of total
rate of $30,00(only a O.Sr/effSSr
"“"iPOny aTiveraStoSy"wage
sSESfIT"
sT;i,-r■ -—n «„
et.
™„0a.e.
'= -I an Insurance nfanOalef^Shlrtr'31^0=,^Snl
S?lnnua«^depenB^“E
benefit SncrSe^TSs EE''’*®''
(0^?? Zrofo^
generally
“"'o aatPloyeesVerebvS Te"'' ^^‘^ation. over
The City’s Annual 10
as have health rthis growth rate
overTml
Pao^ 7
t<
general inflation.
Figure 1 shows the effect of
businesses with many part-time employees offer health
Figure 1
Costs Growth Trends: 1988 - 2007
20.00% n
10-County HSS SuA/ey Rate
Inflation (from SF-CPl)
'Health Insurance Premiums’
^ 15.00% TO
0)
10.00% a
01
re
Qi
5.00%
xz
%
o
0
0.00%
-5.00% ->-■
Sources; Kaiser Family Foundation, 2005 Survey, for Health Insurance Premiums. SF Health Services
System for Survey Rate. BLS for Inflation (SF-CPl).
’ Health Insurance Premium data availaWe up to 2005.
Employers Covered Under this Proposed Ordinance
Table 1 on the follow page illustrates Health Care Benefits by Business Size in San Francisco.
Consistent with studies of Bay Area Employer Provided Healthcare®, most workers who are projected
to be positively impacted by this legislation work in smaller businesses — businesses between 20 to
49 employees.
" See referenced studies in the bibliography by the Bay Area Economic Forum, and by UC Bertreley with Working Partnerships USA.
Page R nf1
t
Care Benefits by Business Size
Businesses hv
Impact of Ordinance
Total
20-49
50-99
100-249 250-499
1000 or
500-999
Total Businesses’
more
42,864
2,594
890
494
144
58
34
144
58
34
Covered Employers
4,214
2,594
890
494
dobs
530,452
UC Berkeley Stud/
% of Employers
Offering Health
Coverage
66,305
87%
95%
86,203
97%
53,928
43,471
63,654
97%
99%
99%
98%
98%
98%
92%
99%
99%
4
1
0
3
1
1
140
35
0
1.124
750
1,872
California Health Care
Foundation Survev
88%
2005^
Kaiser Family
Foundation National
UG Berkeley..Study
95%
74%
Survev. 2005'*
Businesses
Impacted
89,493
—
402
87%
337
98%
92%
45
.
15
California Health Care
Foundation Survev 2on^
371
UC Berkeley Study
14,070
Jobs Impacted
311
11795
45
1575
10
525
California Health Care
Foundation Survey 2005
UC
Berkeley Study
Employer Costs in
i
Millions
(%)
572
10,730
3.353
1.745
$ 30.87 $ 25.88 S 3.46 $
1.15 $ 0,31 $ 0.08 $ 0.00
100.0%
83.8%
11.2%
3.7%
1.0%
% Burden of Cost ^^''fofnia Health Care
Foundation Survey 2005 ^
(%)
100.0%
$ 23,54 5 7.36 $ 5.74
48.1%
15.0%
11.7%
0.2%
0.0%
$ 3.70 $ 2.47 $
7.6%
5.0%
6.16
12.6%
in the United
Survey. ZffOS.' State based
ser 3m,ly Foundaf.on Sun/ey, 2005. National Based Survey.
Pase 9onf;
We expect 48.1 to 83.8 percent of the total estimated $30.9 to $49.0 million in health benefit
mandated costs will fall on businesses employing bebveen 20 to 49 employees. Businesses of 20 to
49 employees are projected to be most affected by the provisions of this ordinance because they are
less likely to provide health benefits currently as well they are more likely to employ lower wage
employees.
Table 2 below illustrates how firms with lower-wage dmployees will be disproportionately
impacted because this new mandate will represent a significant cost over and above the current wage
base in the short-term. For example, a firm with an average wage of $10 per hour will see their
personnel costs increase by 10.6 to 15.9 percent with the implementation of this ordinance.
Table 2. Firms \with Lower Average Wages Impacted More
100 or more employees
(75% of 10-County Rate)
Minimum
Average
tWage
Minimum
Health Care
% Of Wage
Expense
Required^
Hourly
Monthly
Scenario A
Annual
Scenario B
■
$
$
10
1,720
20,640
Hourly
$
Monthly
-$
$
3,440
41,280
$
30
Annual
Scenario C
$
Hourly
Monthly
Annual
$
$
20
5,160
6-1,920
$
1.59
$
$
274.25
3,290.94
1.59
$
$— 274.25
$
3,290.94
$
1.59
$
$
274.25
3,290.94
>19 to <100 employees
(50% of 10-County Rate)
Health Care
% Of Wage
Expense
Required^
15.9%
$
$
1.06
182.83
10.6%
$ 2,193.96
1.06
$
-S.0%-..- $.
-182.83
$ 2,193.96
1.06
$
..5.3%
5.3%
$
182,83
$
2,193.96
3.5%
CCSF 10-County Survey Rate for FY 2006-07
$ 365.66
Implied Hourly Rate("the Rate”) for Health Care expense per employee per hour
Implied Annual Health Care Expenditure /employee
$
2.13
$4,387,92
1. Expense required is 75% if“the” Rate, for businesses with >100 employees
2. Expense required is 50% if"the” Rate, for businesses with >19 & <100 employees
These cost increases may be absorbed by some employers or passed onto customers
through higher prices. However, other employers will find these alternatives less possible and will
choose to cut jobs or hours worked or possibly dose their businesses altogether. To estimate the
impact of Job losses, we have summarized in Table 3 on the following,page the projected reduction in
total hours worked. For example, a business that has an average hourly wage of $10 and employs
more than 19 but less than 100 employees would likely cut total labor hours by between -1.06 to -3.19
percent to offset the additional costs associated with increased health benefits. This estimate assumes
that businesses are unable to cover these additional costs through achieving other expenditure
efficiencies, otherwise lowering profits or through higher prices to customers. This reduction in the
demand for labor can be translated into job losses by taking the # of affected jobs (estimated to be
^between 14,070 and 19,572) times the labor reduction factor of -1.06 to -3.19 percent - yielding
estirnated Tdsses bf 150 to 620 jobs: ^
The significance is really that the proposed ordinance more significantly impacts smaller
employers, since they hire a greater proportion of the lower-wage workers in the Citx. Also, because of
the competitive nature of the marketplace, our projections assume that costs of providing higher
benefits cannot entirely be passed through to the customers by increasing prices, nor that a firm's
owner will be able to cover increased costs by reducing profits.
K/')inrd\A
Table 3. Changes to Jobs:%
' Reduction Yielding 60 to 590 Job Losses
loo or more
ripS
employees
>19 to <100 e
High elasticity
High elasticity
demand for of demand for
Wage
Hourly
Scenario A
Monthly
$
5 1,720
$ 20,640
Annual
Hourly
Scenario B
Monthly
$
-1.59%
Hourly
Scenario C
Monthly
-1.78%
-1.06%
-3.19%
-0.53%
-1.59%
-0.35%
-1.06%
20
$ 3.440
$ 41,280
Annual
Of demand for
—!§bor_-0H
.Q 3
i,• n Demand for Labor
ggtimated %
10
mployees
-0.80%
-2.39%
30
$ 5,160
$ 61,920
Annual
-0.53%
-1.59%
Table 4 shows the distribution
coverage total costs that firms
employees) will face under this proposed ordinanS
care expense
of differenT*Les°"(mtasurl^^ number
minimumof health
full time
- equivalent
Table 4. Schedule of Minimum Health Com p
Employers Under the Health cfre sTcur^
Covered Employers’
gstablishment Sim
o
.S
—.
®
os >■
c
®> .
:z3
» ■<
<2 OSl
JS
20
30
$
40
50
60
70
80
90
100
150
200
250
500
1000
Care Expensp
Hourly
Monthly
Annual
21.26
$
3,657
31.89
$
$
43,879
5,485
$
65,819
$
42.52
$
$
7,313
53.15
$
$
87,758
9,142
5
109,698
$
63.78
$
$
10,970
74.41
$
$
131.638
12,798
$
153,577
175.517
$
85.04
$
$
14,626
95.67
$
$
16.455
159.44
$
$
27,425
$
329.094
493,641
$
197,456 _
$
239.17
$
$
41,137
318.89
$
S
54,849
$
658,188
68,561
.$
822,735
1,645.470
3,290.940
$
398.61
$
797.22
$
$
137,123
1,594.45
$
$
274,245
$
over time.
Employees Covered Under this Proposed Ordinance
Employees who currently do not receive health benefits will benefit greatly from this ordinance
in the immediate future. An estimated 14,070 to 19,570 employees will be positively impacted. The
proposed ordinance results in additional health benefit expenses on behalf of employees that amount
to 3.5 to 15.9 percent increases in total compensation, depending on the average wage of the firm.
Based upon our review of labor economic research, increased wage costs result in reductions to labor
of 0.1 to 0.3 percent for each 1.0 percent increase in total compensation costs. Thus, the positive
impacts on employees by this ordinance will be partially offset by estimated job losses of 60 to 570.®
While job losses are projected to occur primarily among smaller employers, as they disproportionately
do not currently provide health benefits, some job gains are also expected in the health care industry.
Depending on the rate of incremental health care spending that occurs within San Francisco, job gains
in health care could range from 150 to 240.
City & County Government
The Budget Analyst’s Report dated June 19, 2006, outlines a projected fiscal impact of $0.48
million due to higher administrative costs associated with oversight of company health care expense
reporting. In addition to these costs, the City’s payroll taxes could be impacted depending on the
number of general job losses versus health care job gains. The City may also be indirectly impacted to
the degree that non-profits that contract with the City see increasing health benefit mandated costs. In
some cases, these increased costs may be passed through to the City’s General Fund.
The City, as the public health safety net provider,, is .also projected to benefit as more people
have access to health care. Since the cost of the uninsured falls largely on taxpayers as well as the
insured through higher premiums, the City should see at least some reduction in the rate of safety net
spending growthrWhen businesses fail to cover their ernployees,..taxpa.y.ers.ultimately bear the burden
of providing care. This also nneaos,that businesses that do not offer insurance have a cost advantage
over competitors that do, effectively adding to the burden of taxpayers. This ordinance helps to
eliminate the implicit subsidy being afforded to firms that do not offer benefits as well as levels the
playing field to their peers that already provide coverage.
This proposed ordinance would also have some effect on increasing the demand for public
health care services in San Francisco by both City residents and covered employees residing in
neighboring counties. That being said, depending on how much incremental spending the projected
$30.9 to $49.0 million represents, some need for expansion of health care resources—capital and
jobs— to ensure access may occur.
This legislation also creates spillover benefits for neighboring jurisdictions whose residents
are
employed in San Francisco if working in San Francisco means that they are more likely to have health
benefits and less likely to be a burden on their.jurisdiction of residence public health system. While the
costs to San Francisco businesses should provide benefits to their employees, it will at the same time
provide an implicit subsidy to a worker’s place of residence whether that is in or outside of San
Francisco County.
The demand elasticity of labor is a number that measures how sensitive employers are to a change in the cost of hiring. We can use this
concept to estimate the impact of a reduction in the cost of labor on employment. For example, if the demand elasticity of labor were -1, a
1% dewease in payroll costs would increase employment by 1%. Economic studies such as the ones in the bibliography and quoted in the
next footnote suggest the demand elasticity of labor is between -0,1 and -0,3.
«'
Conclusion
cannot afford coverage will lose their jobs.
Jjostslincludinfb'I'wIgennTMngetoefiS^^^^^^^
^^
that work for firms that
Appendix A: Summary of SB 840 (Kuehl) - California Health Insurance Reliability Act
Governance: A Health Insurance Commissioner, elected every eight years with a two-term limit, will supervise
the California Health Insurance Agency, which administers the California Health Insurance System. The
Commissioner appoints the Deputy Health Insurance Commissioner, the Health Insurance Fund Director, the
Consumer Advocate, the Chief Medical Officer, the Director of Health Planning, the Director of the Partnerships
for Health, the Director of the Payments Board, and the Regional Health Planning Directors.
Health Insurance Policy Board; Chaired by the commissioner, includes the seven appointed state officers the
state public health officer and two representatives from Regional Planning Boards. A Public Advisory Committee
to advise the board, representing doctors, nurses, hospitals, dentists, health practitioners, pharmacists mental
health providers, consumers, businesses, and labor will be appointed by the Assembly the Senate and the
Governor.
The Health Insurance Policy Board;
•
Establishes scope of services.
•
Determines need for change or increase in health Insurance premiums.
♦ Sets priorities and guidelines for evaluations, research, capital investment, and public input.
Office of Consumer Advocate; Responds to and facilitates consumer complaints and suggestions Establishes
Independent Medical Review System to provide examinations of disputed health care services Collaborates in
forming Partnerships for Health.
Office of Health Planning; Plans for the health needs of the population, establishes system performance criteria
Identifies health outcome disparities and service shortages and recommends corrective steps establishes
statewide health care databases to support planning and performance review, plans for system caoitat
investments, and links state and private research to health system goals.
Office of Health Care Quality: Headed by the cMef medical officer, sets standards of best medical practice
recommends an evidence-based formulary for pharmaceuticals and durable equipment, identifies treatments and’
medications that are safe and effective, recommends means to achieve an appropriate ratio of oeneral
practitioners to specialists. Collaborates in forming Partnerships for Health.
Health Insurance Fund: Receives and disburses all monies to be expended on health care.
Payrnents Board; Composed of finance and insurance experts and representatives of commissioner and regional
directors. Plans compensation for upper level private health care managers, and health care providers Three-
negotiations with health care facilities and representatives of provider
groups°^^^"^^^'°"
ProyMers may choose fee-for-service compensation or salaries within health care systems. Facilities, integrated
health care systerns and group medical practices can
capitated or non-capitated operating budgets
Payments may include bonuses for meeting the goals ofchoose
the system. Employee unions will negotiate with the
rsyionsi director.
inspector General of the California Health Care System; Establishes an inspector general, in the office of the
Attorney General, and appointed by the Governor, with authority to invesUgate fraud or misconduct by employees
^ ^
of the Health Care Agency, or by providers or consumers.
Hralth Care Regions; Up to 10 regions are established by the commissioner, headed by Regional Health
P anning Directors with funding established by the commissioner,
to support local decision making in the health
planning process. Patients may receive care in more than one region.
Each region has a Partnership for Health.
^Partnerships
for Health: Establishes
^
-
in. the California Health Insurance Agency and in each region by
and the regional advocates and
directors. r
Each Partnership for Health supports health maintenance, Officer,
disease
prevention, good communication
between patients and providers, health education and
better quality of care.
Transrf/on; A transition Commissioner of Health Insurance, appointed by the Governor with Senate confirmation
''
®P
system with retraining and job placement.
^ transition advisory group, the transition commissioner will
help ffiecl the system, oversee the transition from
P®'"°es displaced from employment
by
the new
^
’
state
Care Fund. No
dLn^'i!^®
interpretation, immunizations^
education, hospice care home heaur”^^
p“v"d?rs'IS ™!I“f
private hospital rooms with no medical indication
care by unlicensed
LreS„;i:SSetIThe^::Srpr^ no proven medical value. Chief Medical Officer may authorize
ta
innovation,
and workforce development.
and pravider
budgets
(or both fee-for-service
budgets), capital
investment,
purchasing,
research and
^
commissio^ner andandrejionaf
dS'^rArcIpifaTinv^^^^
large medical equipment'^33^
l^mmissioner wil] establish standards for small caoital PYnonH r
°
^'^'^^’'^^nce
with plans made by the
improvements, land and office
capital planning guidelines. The
The'^svT^"'^f^^"
minimize
operating budgets. Capital
Thj
system wj not pay
fo.^^^^^unneeded expansion^ faciirties anri^tservices, through
and correct
health care disparihes
amrn^hliT"'^®^
ot health care, administration
among health care providers, and education of patients.
of the system. communication
graw'™
“'P “''prall Pbsls wilhin
PpoputebS''
pulbtiOb growth, Slatewids or rogiooal cost ooblaioment
mothoOswiror maSfe
■ AdSCrSvrrS^^^^^^^
• Limiting provider reimburs^mTntc 0..°
P'P-PPtary decrease in benefits,
for inappropriate utilization.
• Deferred funding of the Reserve Account^ specified amount of aggregate billing.
• Negotiating bulk purchasing of pharmaceuticals and medical equipment,
Limiting aggregate reimbursements '
to pharmaceuticai manufacturers,
• Avoiding regional duplication of expensive
services,
• Imposing a waiting period for new residents, if a large number of
purpose of obtaining health care,
•
people are entering the state for
the
Establishing consumer
co-payments.and/or deductibles if
limited to $250
necessary, only after the first two years, and
per person or $500 per family The
commissioner shall establish standard s for waiver of copayments for those with low income
When cost control
care taxes.
measures are insufficient: Commissioner
may ask the Legislature for an increase in health
hS^Cs'I!!'S'VNr;irstp;TLTr.-Sy^
w»rbe rea„oca,ed »,e 3.3,e
allocation of federal dollars to the state Health Care Fund
funding. Federal waivers are required for
n^ow'paid 7onr^^T
i^^^^ance premiums now paid to in^mncTiomoT'^'"® '"h co-pays and deductibles
familiL ni .P'^°'^'9ers. Premiums will be affordable for every Califom?^^^^^
^ilies pay is in proportion to their income and what emnln^o^ ^
business because what
efflcences conlrcl costs. Most businesses and families wIK mollj,
Prepared by Devin Carroll(HCA-Central California) 8/28/2005
'’™''°rilon to wages. Single-payer
Bibliography
1. 2003
MSA
Business
Patterns
bin/msanaic/msadetl.pl
2. 2005,
Economic
Performance
Data.
(NAICS).
http://censtats.census.qov/cQi-
California
Department
of
Finance.
http://www.dof.ca.qov/
3. 2005. Employment Development Department Data. California Employment Development
Department, http://www.edd.ca.aov/
4. California Health Care Foundation, 2005 Employer Health Benefits Survey.
5. Cutler. David M.. “Employee Costs and the Decline in Health Insurance Coverage,”
Working Paper No.9036. National Bureau of Economic Research. July 2002.
6. Cutler, David M. and Jonathan Gruber, "Does Public Insurance Crowd Out Private
Insurance?” Working Paper No. 5082. National Bureau of Economic Research. April, 1995
7. Dravone, David, Kathryn E. Spier and Laurence Baker, “‘Competition’ among employers
offering health insurance,” Journal of Health Economics, vol. 19, No. 2, pp 121-140
Elsevier Science B.V., 2000.
8. Dube, Arindrajit and Ken Jacobs, “Declining Job-based Health Coverage in the United
States and California, Working Paper. Working Partnerships USA, U.C. Berkeley Center
for Labor Research and Education. January, 2006.
9- .Federal Reserve Economic Database. FREDll, Federal Reserve Bank of Saint Louis
(Online).
10.Gruber, Jonathan and James Poterba, “Tax Subsidies to Employer Provided Health
• insurance.” Working Paper No. 5147. National Bureau of Economic Research. June.
1995.
1Jj;^ruber, .^nathan, “Health Insurance and the Labor
4.
MarKet
■l^affdnal Bureau of EcdhoWc~ResMfcbT~Oc4bbef^^^
«
Working Paper No. 6762.
12. Gruber, Jonathan and Larry Levitt, “Tax Subsidies for Health .Insurance: Costs and
Benefits," Health Affairs, vol. 19, no. 1. Project Hope, 2000.
13.Hamermesh, Daniel S. 1993. Labor demand, Princeton, NJ: Princeton University Press
14.Institute of Medicine, Care Without Coverage: TOo Little. Too Late. National Academv
Press, May, 2002.
^
15..Memorandum: Fiscal Impact Report on file 05-1919. Office of the Budget Analyst. June 1,
2006.
16.Neumark David and William Wascher. 2000. Minimum Wages and Employment- A Case
Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment American
Economic Review 90{3): 1362-1396.
17.Richard Kronick and Todd Gilmer, "Explaining The Decline in Health Insurance Coverage
1979-1995.” Health Affairs, vol. 18. no. 2. Project Hope, 1999.
^ ’
18.Shore-Sheppard, Lara, Thomas C. Buchmueller and Gail A. Jensen, “Medicaid and
crowding out of private insurance: a re-examination using firm level data ” Journal of
Health Economics, vol. 19, No. 2. pp. 61 - 91. Elsevier Science B.V., 2000.
19.Thorpe, Kenneth E. “Employer Mandates and the Health Care Crisis’: Economic impacts in
CaiiTornia and the Bay Area." iVianuscript by the 8av Area Economic Forum Mrsmi^rrint
Supervised by R. Sean Randolph. January 2006.
20.Woolhandler, Steffie and David U. Himmelstein, “Paying for National Health Insurance—
And Not Getting It.” Affairs, vol. 21, no. 4. Project Hope, 2002
N:\ANALYSIS\Of<ice ol Economic AnalysisVpending legislationXheal th care security 051919\OEA Economic Impact Analysis for 051919 draft I - FINALdoc
•
FILE NO. 051919
Amendment of the whole
in committee, 7/5/06
ORDINANCE NO.
1
[San Francisco Health Care Security Ordinance]
2
3
J,.3,„
4
Ad,ni„r,MB,.Co* » MS Ch.p»,
S~.o..,4.,.„oo3P „.a.»
5
^^
J ™.n,.pob„o H..,*.ppo..
6
^
pp33„.^
7
^
cMln,.„,M,p^ P..H3 3.^,,
8
^^
operative date.
9
Note:
10
^^e-underline italics Tim^K Mew Rnmnr,-
g®
are ww/tr-fftrowg/i ii,,lioi Times NcVkomnH—
Board amendment additions are double underiinAH
11
Board amendment deletions are
’12
Be it ordained by the People of the City and County of San Francisco:
13
Section 1. Declaration of legislative findings and intent
14
15
Ad San Francisco
residents should have quality, affordable health care. Currently, approximately 82,000 adult
San Francisco residents
16
employed San Fr
•
employed.
San Francisco
taxpayers bear the
17
18
cost of paying for emergency room visits and
other unnecessarily expensive health
care for the uninsured. By establishing a Health Access i
Program for uninsured San Francisco residents with an emphasis
on preventive care and by I
19
requiring businesses to make reasonable health
20
employees depending on the businesses
21
taxpayers for providing health care for the uninsured can be reduced. At the same time, San
22
23
24
25
,
^
care expenditures on behalf of their
pay. *he burden on San Francisco
j
i
i
Francisco can offer uninsured individuals the choice to enroll in
3 system that provides quality j
health care for an affordable
price and offer employers the choice to enroll their employees in
that system. San Francisco also has
.. .
,
^
interest in preventing a “race to the bottom" in
which employers stop paying for employee health care to remain competitive and instead shift
those costs to San Francisco taxpayers.
Supervisors Ammiano. Daly. Mirkarimi Dufty. Ma. McGoldrick, Maxwell. Peskin
board of supervisors
Page 1
7tCii'\r\n/>
f
1
Section 2. The San Francisco Administrative Code is hereby amended by adding
2
3
4
Chapter 14, Sections 14.1 through 14.8, to read as follows:
SEC. Ul. mORTTITT.F.r DEFtNITinNC
5
■
6
Care Security Ordinance.
^ Short Me. This Chapter shall be known and mm ht>
Definitions. For purpose.,ofthh Chapter ih.
7
as the “San Francisco Health
If
term.,,hnll hny,rh.
meanings:
j
8
m "City"means the City and Countv ofSan Franr.i.^m
9
(2) "Covered empinypp
10
as an
means any person who worhi in the City wh^re such
employee entUledio payment afa minimum wage from an employer under the
11
Ordinance as provided under Chapter 12R ofthe San Francism
22
mformed work for compensation for his 6r her emnlo^er for ninety fm dm.
13
14
15
vg Cade and ha.^
. that
Mt term "emnlovee"shall not include persons whn are managerial supervisorial or confidential
employees, unless such employees earn annually under ^77^4Sn or in 200/ and for subseuuent
the figure as set by the administering agency, and shall not include those nen.ny,. ,.,u^
are eligible tn
i
years.
receive benefits under Medicare or
16
|
lhe.CmlianHealthandMedir.nl P,-oeram Uniformed
(CHAMPUS). Nor shall '‘covered employees^'indurJp
17
|
.
I
persons who are ‘'covered emplnvee.^” as
denned in Section 120.2.9 ofthe HmUU Care Accountnhilio.
Chapter 120 ofthe Son
18
Francisco Administrative Code, ifthe employer meets the
19
those employees. Nor shall "covered emplny^^^ include those persons who are empfnypc/ a.
...r..,,, ,•m Section 120^ fnr
> a
20
nonprofit corporation for up tn one year as trainees in a bona fide training oroornm
21
Federal layi\ which training pro^am enable.^ thp trainee to advance into a permanent position
mi^iided that the trainee does not replace displace, or lower
22
position or emplnvp.p
23
24
LS) "Covered emplnvRr means any rnedium-sized or lar^e business a.^ defined hplnw
msamn^i
=
m business within the City that is required to obtain a valid San Fmnri.co husine^.
25
Page 2 '
f «
1
^^rMicgteJimUhe San Franci.crn
rnii^rtrr s office or. in the case ofa nonprofit
business with
2
Small husin^s..c are not "cnverpri
ermlQmis" and are exempt from the h^nUh
3
4
corporation n
~
^^^^^-^Smdingjmmrernents under Sprtir.^ 7 4 ?
employin, um,j,sdeMne^c,io„ 135 oUk.
oUm^MmonMmdinS^n 13 of,he CaW„r„^„,
5
-JdnMoyer"shall include all memhers ofa "c
omrolledgroup ofcorsoratign^ gs defined in
6
l^^^^^joLtMUnited^tes Internal Revenue
except that "more than 50 perrem".Unp
^-i^MMMjQr^lMJemiSO percent" wherev......u
7
8
termasp^s in Section 156S(a)fl) nfiUo i^fr^rrJ
Revenue Code and the determinmin
and
U63fe)(3)fC) ofthe Internal Revenue Cnrto
9
^2i '!Health Access Pmaram
10
^^^^^^i^^^3mlthcareJou^
11,
(S
^3mns_g^anFrancis^epartment ofPuhlir Pto.,pi, program to
Francisco re.trt.^io
Health Access Prnv
12
mm^mmCmeanLom uninsuredSan Frn.r-i..^ resident.
,r ,er
13
14
15
JmlmLOr^nrolU
.He .erme ee.„H,.eH....
the_Demrtrnent ofPublic UanUu
ill—.Health care e.rpenditure.”
to
r.n^er.P
16
the, rn.f nf.uH.U
17
18
services for its covered e.mplovee.s^
d^ckding^bMnollUni^ (a) contributions h^> ...nU
mployer on bHwJfpfUs covered e.mpIn.,.o. to a
hemuavings^ccount as defined under
3^Hion223oj[theUmted States Internal Re^u>....
19
or to
any other accomi having substnntinlly
20
sem ent
21
■-. ,He .ureH„ee e,.,„ue care 1
purpose ofneoeiH,...
22
^ei-vices for covered emplovp.ps; (P\
23
health care
costs incurred hv n
ca re
covered employer in the direct delivers, nf
to
24
25
Superasors Ammiano, Daiy, Mirkarimi . Dufty, Ma, McGoldrick, Maxwell, Peskin
BOARD OF SUPERVISORS
Page 3
1
2
Notwithstanding any other provision ofthis xubsectinn^ "honlth care expenditure" shall nm
Ugyment made directly or indirectly fnr M,nrk^r.’
anv\
cmpensation or Medicare henefit^
"Health care expenditure
3
4
,
care exnenHinn-. tUr. a covered
mEloyer shall be re.ulr.ri „a^,f^reaMougmUJor each ofUs
5
Jt me.Mmlovee to the CAtv Hen.lth Service Siv.fPry^
6
Charter based on the annvnl ipv,
7
contribution prorated on
8
quarter,
■
IheNieqlttcare expenditure rate ” shall be determir,.ri
'average contribution"for a Ml-
misugnup Section A8.473 ofthe San Fm.H.rn
county survey amnunl for the annlicnhJp f,.rnl year, with such nvprnor> \
an hourly basis hv dividine the monthly m.4ra^e contribution hv one hundred
M.'ventv two (172)(the number ofhour.^ worked
i a month by a full-time emninvee). The "hy>y,hu
- - in
care
expenditure rate"shall hp •
9
10
1:1.;
s^
_ nty five percent(75%)ofthe vrecedin^ hn.,.ly amase contribution fnr
krS^bmnesses andjjjbuoercent(50%)far medium-sized
(9) "Health care
^^rvim::jmms_medical cgre^^^ces, or soods that n,n.>
-deducmejnedicQl pare e_^penses under Section 7 U ofthe Internal Revenue Cnytr
> as tax
or medical carp
12
expenses.
13
14
15
16
(LO) ‘‘Hour paid" or "hours paid" means n
hour orj^k hours for which, g oer.ion ;>
mL-dmse_sor is entit!edMbe„paid wa^es for workperformed within the City
vacation
hours and paid sick leave hours. For salaried
I
mrsons.Clhg.urs paid" shall be calculntPd based on a
iMiguLwork week for a full-time emplnvpy>
■
—Lgr^e business ’’ means an employer for which averase ofone hundred nnn\ or more
covered employees per week perform work, fnr compensation durin? a quarter.
an
17
18
I
i
^—Medium-sized business" means an emnlovp.r for which average ofbetween twenty
(20) and ninety nine (99) covered empinvppc mry^eek_perform work for compensation dunno
an
19
a
quarter.
20
(12) "Person’
21
22
23
24
mgn^gnyjmirgl person, cor^orgdgn^jok^rojy^^
mociation, joint venturejimited liability company, or other le^gl e.ntiir
MM)_i:Required hmlth care expenditure ’■ means the tntnl h^nhu care expenditure that n
covered employer is required to mntp
eyei-y quarter for all its c overed emplnveer
25
Page 4
7/« nr\f\c:
■
(^
^^- ^^-^^^mMbusines^eans an emnlnvpr (nr
1 I
\
2I
^^y^rM^plovees per week perform ^>n.Ir f..
gn_avera2e offewpr than hvtmn, nm
compensation durine a qnnrtpr
3 I
SEC. 14.2. S4 N FRANCISCO HEA1.TPf ACCESSPROGRAM
4
(^^UllcSanFrancisco Dppnvtrnent ofPnhUr U.nPU shall administer the Health Arrest
5
£^^^SLPm._JJndeaM
6
care from a network
Prncrrnr.
-^ JPmmedSgn_Frmcisco residents may obtain health
PomlstingMSctn Francisco Gmeral Hospital anr)tho
7
I
rtmentofPuhlir
prnviAnr. tUn.
^FidMeLcriteriaJoj^^^
8
IMMJhe program's gunJip,
Health Acre..
IS not an insurance plan fm-
Access Program participantx
9
shall nnnrPi.nf.
10
mb a third parts’ vendor to aAniiinta..
^1*
:=^£rogrammerations, includim basic customer
Utilizatinn hWi..^
11
-and communication with the participants^
12
IcrThepPie:^
ppm to uninsured San Francisco rp.siApyii^
Qf-mplmmtMatMS^ElmbilitV criteria .Unit
13
no
be established_hyjhe Department nfPuhU.Health
14
Program bns.A r..
but
apre::existin<2 conditiny,
15
? terms
^^-^^FrdlmenUtLh^d^^
16
payments
17
I
18
individuah
' ^^0-'
prioritize^eryices for low and
fr„„ .1.. r-it\[.
Funding from
,•
—^Ancpmej?ersom^h costs based nn <h.
|
dcce^Program participant’s nhUtH to miCFundUtgJmtJhe City shall suhsirJh.o employee
19
i
enrollment by medium-sized and small businesses
^-^^-^^i^^i^QlillAccessPrp^ram shall use the “Medimt Rnr.. model in which a primam rare !
21 !
physician, nurse practitioner^ prjphysician assistant develop nr,A At...,
22
a. plan ofcare for each Henlth j
^^^^FilProgrmj2micipant. coordinate referrals fn,- iminzandspHcialpLservices. andmnnOn,i
20
I
23
24
management ofchrome conditions and dh-^n^^c
Access Program
^'^i^^^MdhAccesiProgr^
Participantjoa primary care, nhysician
I
practitioner, or physician assistnm
25
Supervisors Ammiano, Daly, Mirkarimi Dufty, Ma, McGoldrick, Maxv/ell, Peskin
board OF SUPERVISORS
Page 5
[
[jl.. The Health Access ProsTam shall providp. medical services with an emphasis on wellnps^-
1
delivery. TheProsTagsLall,ro,id. m^dicn,
2
*
3
cosmetic, and outpatimt mental hpnhh
4
^
I
^^^^^i^^^^-IhePe^rtment ofPublic Health mav further
the^yices to be provided, except that curb services wv., at a minimum, include: vrofe.ssinnnl
5
medical services bv dnrtm-
6
providers, includine Dreve.ntive
^^JmMM.actitioners,,MhMcima^ants, and other liccr.^ri h..uu care
7
8
. ^
jaimarv. diaMc mdspecial^: mes:
hospital services, indudins acute Innmient mental h„alih sm:r„,■ dia^ostic and laboratory services.
including- therapeutic radinloviml
, ,
^^rmeKMmirnQnAugs^exch^dru^ for excM c.,
tmme health care; and emergency care provided i
UlScmFranciscohy contracted providers irrhi^itaa
9
mer^enev medical transportation ifno.>rt,art
10
~—-—
1:1
The Health Access Progmm shall offer the
opportunity for employers to enroll their
■mP^y£^ md:for,:iMmdnatei7raltnenti7v :-Julv I mm
j... .
12
13
14
15
SEC. 14.^.
-
required JfEALTH CARE EXPENmrnp fc
Required Expenditures. Covered employers rhnll m ake required health care exnPrHitt,yp>P
on behalf of their covered emplnyees each
!mlth care expenditures made hv
16
17
18
dm:Mi,-Jhe^itYCmiMei: shall maintain any required
anemployer to theCipijepgratejmd^art from general fvrtrtp and
The rertmr., U..UU
mmdemplgyer_shgLl.be calculated hv mr,Jtinh,;.rr
mmdmslQymdunng_die_quarter (including nnh,
19
mmhjollpwin^ ninety (90) calendar dnv, nfmt^
20
heglth_care expenditure rate. In determiniy^a ^th.tu.,.
21
22
23
care expenditures, payments m
or
a
iQmLmmh^r.of hours paid for alt nfit,
—--Morlingmjhe first day of the mlpnrln,-
coveredem ployee's date of hire) hv thp
'
gcoveredemployer has made, its required hpnttu
on behalf of a coyeredjemglgyeg shall not be considered ifthtas,
exceedJhe following amount: the number of hours naid fnr ,ho
multiplied bv the applicahle health
care exnenditurr in r n
covered employee durinv thp
i
Quarter
sms expenditure rale . Ths CioPs nff,r,e „f Labor RioosWr,,
rniLscmml (OW .shqnen{orcsjhs_heal,h sspsndUure ,-eou'„„,so„
,..v
24
25
loARD OF S™KV°,S0RS
Page 6
;
Employpr ResonmihiUti^^
1
records ofhp.nlth
2
-Acgmed employer siigU: (i) mainiaiy,
mre^nendilures. required health
made each auartp.r pnrh
3
4
lojuchrecpr^ provided
ihaLcoyered ern^lp^^s shall not he required tn maintain such re.cnrrh in
i any particular form: and fu)
provide a report to the administering ni
or the OLSE's desimep
5
such other information as OLRF ^hnli,
6
information in violntinr,
7
^^^^^^^^^^^amerecgrd^documentinfr thp ha^hu
8
9
10
117
^^^^^-mmditureLMndproofofsuch expe^dhu^.o
Yeqnmdallow OLSE re.o^nnnhlo access
on
gnamual basis cnntniy,iy,r,
to nrnviH.
or
imsongble access to surh records
federal privacy laws Wh^i-a
an employer does not mnimni^ or
mendUurennad^r does not allnu, nr cr
"
iLshall he presiirmd that the emplm,Pr rtirt not make the required
b^^MhME§ndituresfor the quarter far
and convincing
^^ddmceMienvise^n^
ofTrea.nr.r and Tax Collector shall have the authnrtn,
to provide any
md all-information 4onJ Stir
. .
to iulm the nrsF'n:eMmLkm,ies as the.
12
13
-^^^^^3TLE]mciscpBusiness_^ Tax Regulations Cod.
SEC. 14.4
14
15
administration AND ENFORCEMENT
(^^-^Si&-D^EmnmMEMic Health shall d^.,.lnr.mdmrpmulfpate rules tn govern th,^
16
QMmionofthe Health Arr^..
17
the_enfQrcement ofthe^hlizations ofemnlnver,mderAhisChapter. The rules shall nhn
establish
18
procures for covered
19
pequired health care
20
information that wnuht
21
procedures for vrovidincr emnlover,
22
ram
The_ OLSE shall develop and promulgate rules to provide for
to. maintain accurate records ofhp.nlth care expenditures and
expenditures and provide report to the CitYJvithout requirins any disdn^nr^. r.r
meorjederal privacpdam^.The rules shall
establish
notice that they may have violated this C.hnptr>
to.the notice, a procedure for nntifimti Qf.the finaldetermination ofa vinJnfiny,
arUtht to respond
ion
.and an apnenl
23
^_.The sole means ofreview ofth^.24
hearimy officer's decision shall be bv filinv mJhe_Sanfyancisco Superior Court
gjpetilion for a Mmit nf
25
Supervisors Ammiano, Dai
y, Mirkarimi, Dufty, Ma, McGoldrick, Maxwell, Peskin
BOARD OF SUPERVISORS
Page?
\
!
1
mandate under Section 1094.5 ofthe California CnHn nfr
2
finally until after a public hearintr
ml Procedure. No rules shall he adnniprl
^
3
implementation ofthis Chapter
maintain an education and advir.p
4
on an
mmnft basis thereafter, the Cit^, i-hnil
MP-gnam to as^^st employers with meeting the requirements ofthiv
Chapter.
5
(dLAm_ employer thgir^es the number ofr.nv.redenmlnv.e y beloy: the number that would
6
7
have resulted in the employer hein? considered a ‘m‘ ^ered employer. ” or below the number thm u,n„u
have resulted in the employer heAnxr considered amdiuntsiMdpr lar^e business, shall demn^.r.nr.
8
that such reduction
9
inyiolation ofthe ChnptPr
-i-
was
notdonejgr the purpose ofemdirmthe oblisations ofthl, Chnpin.or shall he
fi shall be unlawful f<or
10
11.
gny employer or coveredmplover to deprive, nr thr.n,.^ deprive
m&mimmm>mmm>^crthrea,,rrt^,ake mmmioammamkmmaim
„
12
any
•
Pommand orinfluence or attempt in
or
13
<a!SrmSU>mmmMUnmmkm.lo enforce. i^SSMhout^„
eltblsaumaUMmZadsr^acH^^ af,an„a^,„n„ m,Hin mnm m,
14
15
of,h,.
,resu„„io„
so
WJimlmonjQUhe exercise nf.'ojrh Hohu-
16
and covered
17
„V,..
s
Chapter and may impose administrative, penniti^. mpnemployers and covered employers whn vintm.
18
\
this Chapter, including the r
mutemenlJ that businesses allow the City reasonable access to records nf \
19
healthexpenditures. as follows: the, nmnum ..f
foonScancLpnechalftimes the total expenrlia,...
cohered employer failed to make plus .dmple n^^uni
—- interest ofup to ten (10) percent from the date
20
a
21
payment should have been made
to The City Controller shall
22
\ ■
S
mr mrt on impdementatipn ofthe Health Acce.ss P,-ogram.
including participation rnie^
23
and
o„,He .canon,,.
24
Chapter, to the BnnM ofSupervisor., on tuuemdy baste through the e„rl of tnno
25
iI
on an ann ual
supTb”,sots"'*""''
Pages :
1
2 !
^^SsmgJhnmpknMionnfjhisChmeLjRW
ennsors shall hnl^ n
3
4
to
5
r^,
6
7
8 !
rates; desi^nma th.rmse ofbenefits nnd h^nhh
j^iiMmicinms^d researching^ utilhntin.
‘
care servirpv
actuaries, and costs'
9
10
11
,,,,,,P,„„_
■and for
.“Tf^e^iS^fflfiBite^ilJaamalofflra^^ ,hi.
er
■.rpp
12
13
14 I
15
■
competent servir.pg
SEC. 14.5. SEVERARn.TTV
If-MmLAection. suhse.c.tinr,^
Ehrase^Jiazortion of this Chapter i, f^. any reason hpJrt
inmlidpr unconstitutinnnl hy any court or fedeml
16
^EMmagma^Mcmpetent iurisdintinn ,„rt,
mriion shall he dp.Pmpr^ a
and such hnldi.o .h.ii ...
17
affect the validity nfihp
18
be deemed severnhJp
I
19
20
21
22 !
SEC.14.6. PREEMPTiniv
^^Ofhim in this Chapter ..-hnU hn i^dEmmM..or applied sojii_to create any power
obligation in conflir.t -unth
or
^^EJWnmdby, any federal nr .mto la^,.
23 I
SEC.14.7. GENERAL WF.T.F4Rrr
24
25
Supervisors Ammiano, Daiy, Mirkarimi Dufty, Ma, McGoidrick, Maxwell, Peskin
board OF SUPERVISORS
Page 9
|
is assuming an m^ertakirm only to promote the ^P.r,Prnl welfare and
1
2
Otherwi^atis^ its ohUmtions to provide health care under avnlicnhlp In^, This C.hnptershould in
no wav be construed hk
an
3
mansion of the atv‘s_existin^ obligations to provide health m m under
state and federal lawK and the City .■^hnll set all
necessary criteria for enrollment consist ent with iis
4
le^al obligations. The City is not assuming, nor is it impr,‘tir,o on its officers and emnlnvpp
5
oblivion for breach of which it is liable in money dnmna,. tn any mrson
6
who claims that such br each
ElWmehcauMdJnjury^ the fullest extent permitted by law, the City shall nc.ur.. ... /,v.a.-,.,.
7
8
■V, an
by a ouhlic nffrrr n.
undeuheM^isions of this Chapter shall not becom^ersonal liability nfn.. n,.A;,v .re,.,,
I
r or
employee of the Citv.
9
10
SEC. 14.8. OPERATTVF BATV
11,.
.Sh&Jgy thisEhgpter becomes p ffprih,^^
12
lMP^PPosi^m:md:tirrv fd(mfemerits n n:" -
13
mediMm^medogarMj^^
,
14
Jm!v1J007. Any requirenimm on medium-sized
15
employees shall become operative on January I. 2(m Thic Chanter i *
is intended to have prospective
or more cnvererl
effect only.
16
17
I
I
18
19
20
APPROVED AS TO FORM'
DENNIS J. HERRERA, City Attorney
21
22
By:
ALEETA M. VAN RUNKLE
23
24
25
onTr'o
Ammiano, Daly, Mirkarimi, Dufty, Ma, McGoldrick, Maxwell Peskin
BOARD OF SUPERVISORS
Page 10
^
7/6/2006
^
FILE NO.
LEGISLATIVE DIGFST
[San Francisco Health Care Security Ordinance]
Francisco Administrative Code to add Chapter 14,
Ser«nn= LTr
brccreating
0^00 ajaublic
a ouSelhh’
residents
Dy
health access program for the uninsured, requiring emolover
oaid
exDLnd1tures'^c'''^^•’
operative d?te
an employer may make such ^
"®
^^Fess working group, and setting
an
Existing Law
Exis mg law does not require that licensed businesses operating within San Francisco make
health care expenditures on behalf of their employees. Local law does require that certain
City contractors and lessors of City land comply with the Health Care Accountability
the Administrative Code, by choosing to pay a fee to the City to
offset the cost of the ■^20
City of
s provision
of health care to the uninsured and underinsured ^
populations, or by providing health care coverage to covered employees.
There are no existing local provisions on the Health Access Program.
Amendments to Current Law
The proposed measure entitled the "San Francisco Health Care Security Ordinance" will
amend the San Francisco Administrative Code by adding Sections 14.1 through 14 8 The
..
measure combines the proposed legislation creating the Health Access Program with the
proposed Worker Health Care Security Ordinance.
A. The Health Access Program
The San Francisco Health Care Security Ordinance creates a public health program to
provide a set of health benefits for uninsured San Franciscans. The San Francisco
Department of Public Health will create and oversee the Program, which be called the San
plan for participants. Under the Program, uninsured
Francisco residents may obtain
medica care including, but not limited to, services in San
the areas of preventive, primary and
specialty care, as well as urgent and emergency care, from a network consisting of San
profiTproviSrs^''^' Hospital, the Department of Public Health's clinics, and community nonThe Health Access Program will be open to uninsured
San Francisco residents, regardless of
employment or immigration status, who are otherwise eligible
for services. No eliq^e
participant shall be excluded from the Program based on a pre-existing condition.
BOARD OF SUPERVISORS
Page 1
7/7/2006
cAdocume''1\vvouna\locals~Utf>mn\nntBc4'nhan\hithT4 a.,.-
FILE NO.
The Program will provide participants with medical care, with an emphasis on wellness and
preventative care. The available benefits may include laboratory, inpatient hospitalization xray, elective surgery, and pharmaceuticals. All participants shall be eligible for the same ’
benefits and health care services.
The Program may be funded from a variety of sources, including payments from participating
employers that are satisfying the health expenditure requirement, individuals, and the City and
County of San Francisco. City funding shall prioritize Program services for low income
participants, and shall subsidize where possible, participation by businesses with fewer than
one hundred (100) employees.
A third-party vendor, in coordination with the Department of Public Health, will administer
program operations, including basic customer services, enrollment, tracking service
utilizations, billing, and communication with the participants.
Under the proposed legislation, the Director of Public Health shall convene an advisory Health
Access Working Group to provide the Department of Public Health and the Health Access
Program with expert consultation and direction. The Mayor and Board of Supervisors shall
have input on members selected for the Working Group. The Health Access Working Group
shall be advisory in nature and may provide the Health Access Program with input on matters
including: setting membership rates; designing the range of benefits and health care services
for participants; and researching utilization, actuaries, and costs.
The Health Access Program shall offer the opportunity for employers to enroll their employees
and for individual enrollment by July 1,2007.
B. Employer Health Expenditures
The measure requires that employers engaging in business within San Francisco, that are
required to obtain a valid San Francisco business registration certificate from the San
Francisco Tax Collector’s office, or an employing unit as defined in the California Labor and
Unemployment Codes, with a minimum of twenty (20) covered employees, or in the case of a
nonprofit corporation, fifty (50) or more covered employees, make health expenditures on
behalf of employees. The expenditures shall be made on a quarterly basis and will be
required after an employee has been paid for ninety (90) days. The measure also sets
penalties and provides for enforcement by the City's Office of Labor Standards Enforcement
(OLSE).
Under the measure,"Health Care Expenditure" means any amount paid by a covered
employer to its covered employees or to another party on behalf of its covered employees for
the purpose of providing health care services for covered employees or reimbursing the cost
of such services for its employees, including, but not limited to:
(a) contributions by such employer on behalf of its covered employees to a health savings
account as defined under section 223 of the United States Internal Revenue Code or to
any other account having substantially the same purpose or effect, without regard to
BOARD OF SUPERVISORS
Page 2
7/7/2006
c;\docume~1\vyoung\locals~1\temp\notes433be0\hlth7d.doc
FILE NO.
whefter such contributions qualify for a tax deduction or are excludable from employee
(b) reimbursement by such employer to its covered employees for incurred health care
expenses,
(c) payments by an employer to a third party for the purpose of providing health
care
services for covered employees,
(d) costs incurred by an employer in the direct delivery of health care services for covered
employees, and
(e) payments by an employer to the City to fund health services for uninsured San Francisco
residents, including employees.
Notwithstanding any other provision of this subsection, such term shall not include any
payment made directly or indirectly for workers' compensation, the Civilian Health and
Medical Program of the Uniformed Services, or Medicare benefits.
Employer' shall mean an employing unit as defined in Section 135 of the California
Unemployment Insurance Code, or a person as defined in Section 18 of the California Labor
Code, including all members of a controlled group of corporations. A "controlled group of
corporations
shallthan
have50thepercent"
meaningshall
given
Section 1563(a) of the Internal Revenue Code
except
that more
be insubstituted
for "at least 80 percent" wherever
such term appears in Section 1563(a)(1) of the Internal Revenue Code and the determination
shall
be made without regard to Sections 1563(a)(4) and 1563(e)(3)(C) of the Internal
Revenue Code.
The measure does not include within the definition of"Covered employees" those employees
subject to the Health Care Accountability Ordinance, Chapter 12Q of the San Francisco
Administrative Code.
For medium-sized businesses employing between 20 and 99 employees, the required
expenditure would be 50 percent of the ten-county survey rate used to set health care
contributions for City employees. For large business employers with 100 or more employees
the required expenditure rate would be 75 percent of the ten-county survey rate.
expenditure for a covered employer shall be calculated by
multiplying the total number of hours for which its covered employees were paid durinq the
quarter (including only hours starting on the first day of the calendar month following ninety
(90) calendar days after a covered employee's date of hire) by the applicable health care
expenditure rate. In determining whether a covered employer has made its required health
care expenditures, payments to or on behalf of a covered employee shall not be considered if
they exceed the number of hours for which the employee was paid during the quarter
multiplied by the applicable health care expenditure rate.
Proposed amendments include: revising the effective date for participation in the Health
the City Controller shall maintain any
required health care expenditures made by an employer to the City separate from the general
BOARD OF SUPERVISORS
Page 3
7/7/2006
c;\docume~1\vyoung\locals~1 \lemp\notes433be0\hlth7d.doc
FILE NO.
funds; and the City shall maintain an education and advice program to assist employers with
meeting the requirements of the measure.
Addihonal reporting obligations are proposed in the amended measure; the Controller shall
u
Supervisors on a quarterly basis on the implementation and effect of the
Health Access Program and the Health Expenditure requirements. The City Controller shall
also report within sixty (60) days after any significant event affecting the implementation of the
measure, in which case the Board of Supervisors shall hold a hearing within thirty (30) days of
receiving the report to consider responsive action. The Department of Public Health and the
OLSE shall report to the Board of Supervisors by January 31,2007, on the development of
rules for the Health Access Program and for the enforcement and administration of the
employer obligations under this Chapter. The Board of Supervisors shall hold a hearing on
the proposed rules to ensure that participants in the Health Access Program shall have
access to high quality and culturally competent services.
The measure shall become operative in three phases. The day this Chapter becomes
effective, implemen ation of the Chapter shall commence. The Health Access Program and
any requiremen s placed on medium-sized or large businesses with fifty (50) or more covered
requirements placed on medium-
i
covered employees shall become operative on
January 1, 2008. This Chapter is intended to have prospective effect only.
Background Information
All San Francisco residents should have quality, affordable health care. Currently,
approximately 82,000 adult San Francisco residents are uninsured, even though more than
half of those individuals are employed. San Francisco taxpayers bear the cost of paying for
emergency room visits and other unnecessarily expensive health care for the uninsured By
establishing a Health Access Program for uninsured San Francisco residents with an
emphasis on preventive care, and by requiring businesses to make reasonable health care
expenditures on behalf of their employees depending on the businesses’ ability to pay the
burden on San Francisco taxpayers for providing health care for the uninsured can be’
reduced. At the same time, San Francisco can offer uninsured individuals the choice to enroll
in a system that provides quality health care for an affordable price and offer employers the
choice to enroll their employees in that system. San Francisco also has a vital interest in
preventing a race to the bottom" in which employers stop paying for employee health care to
remain competitive and instead shift those costs to San Francisco taxpayers.
BOARD OF SUPERVISORS
Page 4
7/7/2006
c;\docume~1\vyoungMocais~1 \temp\notes433bea\hlth7d.doc
Memo to Budget and Fiucince Committee
July 11. 2006 Special Budget and Finance Committee Meeting
Item 4- File 05-1910
Note:Tl,e proposed Amendment of the Whole (see Descnpt.on section below) was
continued at the July n, 2006, meeting of the Budget and Finance Committee.
Department:
Department of Administrative Services -
Office of Labor Standards Enforcement(OLSE)
Department of Public Health(DPH)
Office of the Controller -
Office of Economic Analysis
Item;
Ordinance amending the San Francisco Administrative
Code by adding Sections 14.1 through 14.8, to provide
hea th care to San Francisco residents by (a) creating a
public health access program for uninsured San Francisco
residents, (b) requiring that employers doing business in
ban Irancisco, employing at least 20 employees make
health care expenditures on behalf of their employees;(c)
identifying options for how an employer may make such
expenditures; (d) creating an advisory health
working group; and,(e) setting an operative date.
Description:
access
The proposed ordinance is an Amendment of the 'i^fiiole
merging two proposed ordinances. File 06-1919 and File
06.0893 into one File 05.1919. The Budget Analyst’s
report below is unchanged with respect to the original
report on File 05-1919, the “Worker Health Care Security
Ordinance,” and has added one Comment with respect to
BOARD_QF SUPERVTSOR.q
BUDGET ANALYST
1 Q
Memo to Budget and Finance Committee
July 11, 2006 Special Budget and Finance Committee Meeting
the original report on File 06-0893, the “San Francisco
Health Access Program,”
Description of the
Original File 05-1919: The proposed ordinance would require that employers
operating within San Francisco who employ at least 20
employees, or nonprofit agencies who employ at least 60
employees, to make health care expenditures on behalf of
their employees for the purpose of either (a) providing
health care coverage to such employees or (b) reimbursing
the cost of health care for such employees. The proposed
ordinance would authorize “health care expenditures” to
include expenditures by covered employers for their
employees for (a) health savings accounts, (b)
reimbursement of health care costs incurred by covered
employees, (c) payments to a third party for the purpose
of providing health care services, (d) costs incurred by
an
employer m the direct delivery of health care services to
covered employees, and (e) payments by an employer to
the City to fund health services for uninsured San
Francisco residents.
Required Health Care Expenditures bv Employers
The , proposed ordinance would require all “covered
employers^^^ to make health care expenditures for “covered
employees at a rate equal to (a) 75 percent for covered
employers
employing 100 or i^ore covered employees, and
_
(b) 50 percent for covered employers employing between
20 and 99 covered employees and covered nonprofit
agencies employing between 50 and 99 covered
employees. The rate to be paid to provide for employee
' P^°P°sed ordinance defines a “covered employer” as “any medium or large business las defined
within the proposed ordinance] operating within the
Francisco business license from the San Francisco Tax City that is required to obtain a valid San
Collector’s Office, or, in the case of a nonproS
corporation, a busmess with a minimum of fifty (50) covered employees.”
ordinance defines “covered employee” to mean anyone
who has performed at least two
hours of work per week over a period of ninety days for a covered employer,
provided however that
L^nlT''
managerial,
supervisorial,
or confidential
employees, unless such employees earn annuaUy under $72,450 or in 2007 and for subsequent
he figure as set by the OLSE. The proposed ordinance further states that “covered employees”years
will
not include employees covered under the City’s Health
Care Accountabilitv Ordinance
^ 1 he p roposed ordinance further authorizes that any businesses that
are part of a larger corporation
which has a controlled share of 50
1
f .u
.,
percent or more of such businesses will be considered as on-
employer for the purposes of this ordinance. For example, if a corporation has three franchises with
oO covered employees each and has a controlled share of more than 50 percent for each of the three
franchises, then all three franchises would be considered
as
one employer with 150 employees,
Therefore, each of the three franchises would be required to provide
health care expenditures at a
BOARD OF SUPERVT,BOT?q
BUDGF^ ANALYST
1 /.
Memo to Budget and Finance Committee
July 11, 2006 Special Budget and Finance Committee Meeting
health
^
care services shall be at the average contribution
rate approved by the Board of Supervisors based on the
Citys Health Service System annual ten-county survev
amount for the applicable fiscal year and paid by the City
2007"^^
System, which in FY 2006-
is $36o.66 per month, or approximately $4,388
annually.
The Budget Analyst calculates that under the proposed
ordinance, the health care expenditure rate to be paid by
coveijd employees for each full-time covered employee
n
$274.25 per month (75 percent of $365.66)
per lull-time covered employee, or approximately $3,291
annually, for covered employers employing
100 or more
covered employees; and (b) $182 83 per month (50 percent
of
$365.66)
,
per
full-time
covered
employee,
or
approximately $2,194 annually, for covered emplovere
employing between 20 and 99 covered employees and
covered nonprofit agencies employing between 50 and 99
covered employees.
The proposed ordinance would
expenditure rate
prorate the health
care
on
an hourly basis, dividing the monthly
average expenditure rate by 172 hours per covered
employee and multiplying by the actual number of hours
worked by all covered employees. For example, if a
covered employee of a covered employer worked 86 hours
health care expenditure rate to
be paid by the covered employer would be one-half of the
full-time covered employee amount above
or $137.13 (50
percent of $274.25) if the covered employer employs 100
or
more covered employees.
The proposed ordinance would further prohibit
an
emp oyer from (a) reducing the number of covered
employees or (b) reducing the number of employees who
perform compensated work for such employers, for the
purpose of evading the obligations of this proposL
ordinance. Under the proposed ordinance, the employer
be responsible to demonstrate that any reduction in
rate of 75 percent (and not 50 percent, as would be the case for
—
annual ten-county survey.
99 employees) of the average
S-P™- baJed on upthetoCity’s
Health Service System’s
board OFSUPFiRVTcinpQ
BUDGET ANALYST
1 q
Memo to Budget and Finance Committee
July 11, 2006 Special Budget and Fina nee Committee Meeting
the number of covered employees was not done in order to
evade the obligations of the proposed ordinance.
Covered
employers
would
be
responsible
for (a)
maintaining accurate records of health care expenditures
and proof of such expenditures made each quarter, and (b)
providing
an annual report to the
.
Department of
Administrative Services Office of Labor
Standards
Enforcement (OLSE) containing information, as required
by OLSE, regarding the employers’ compliance with the
proposed ordinance.
Proiected Enforcement Costs t.n the OLSE
The OLSE would be responsible for enforcement of '
the
proposed ordinance, including (a) review of the annua^l
reports and annual records of health care expenditures
submitted by all covered employers subject to the
provisions of the proposed ordinance; (b) notification
to
the employer of violation of the provisions of the proposed
ordinance, the required corrective action, and amount of
penalties that may be imposed (the penalty amount may
be up to one and one-half times the total expenditures
that the employer failed to make); (c) handling of appeals
by employers who OLSE has determined to be in violation
ol the proposed ordinance; and, (d) investigation of
complaints submitted by covered employees whose
employers do not provide health care benefits or funding
for health care expenditures.
The Attachment is
a memorandum from Ms. Donna
Levitt of the OLSE which states that OLSE estimates the
total costs for enforcement of the proposed ordinance,
including staffing and mailing costs, would be $450 000
annually.
Additionally,'
Ms. Levitt estimates one-time
.
,,
costs incurred by OLSE for enforcement of the proposed
ordinance at $30,000. According to Ms. Levitt, such funds
to cover the enforcement costs will be included in a future
budget request by OLSE. Ms. Levitt advises that total
enforcement costs may change over time as OLSE is
better
, able^to determine appropriate staffing and supplv
costs. The Budget Analyst will review any future budget
reqimst, including funding sources, which is submitted to
the Board of Supervisors.
BOARD OF SUPERVTSOPQ
BUDGET ANALYST
1 c.
Memo to Budget and Finance Committee
July 11, 2006 Special Budget and Finance Committee Meeting
Description of the
Original File 06-0893:
The proposed ordinance would direct the Department of
Public Health (DPH) to create and oversee a San
francisco
Health Access Program (HAP) which would
provide medical
services to uninsured San Francisco
residents for the prevention, diagnosis, and treatment of
medical conditions, excluding vision, dental, cosmetic and
outpatient mental health services.
As stated in Section 19.4 of the proposed ordinance, the
p^roposed HAP would be a “partnership between the
Department of Public Health and various private and
public entities. It may be funded from a variety of sources,
including payments from employers and individuals, and
the City and County of San Francisco. City fundin'^ shall
prioritize Program services for low and moderate income
participants, and will subsidize where possible,
participation by businesses with fewer than one hundred
(100) employees.” The Budget Analyst notes, however
that the proposed ordinance (a) does not specify any
mechanisms for implementation and administration .f
of
the proposed HAP and (b) does not specify.'any funding
sources for the proposed HAP (see Comment No 1)
Dr. Mitch Katz, Director of DPH, advises that total
estimated costs of the proposed HAP
approximately $198,030,000 annuaUy,
would
which
be
DPH
calculates using an estimate' of $201.25 cost per HAP
member per month, or $2,415 annually, and including an
estimated 82,000 uninsured San Francisco residents who
would be members in the proposed HAP.
Of this estimated $198,030,000 total annual program cost
for 82,000 members. Dr. Katz advises that DPH estimates
potential funding sources would total an estimated
$200,000,000 to $229,000,000 annually. The potential
funding
sources shown in the table below were provided
by Dr. Katz,
was
BOARD OF SUPERVTSOfi.q
BUDGET ANALYST
T -7
Memo to Budget and Fmcnce Committee
July 11, 2006 Special Budget and Finance Committee Meeting
Potential Funding Source
Estimated Annual Amount
City’s Contribution
Employers’ Contributions
$104,000.000
30,000,000-49,000,000
Individual Enrollment Copay Contributions
Federal and State Programs
Total
56,256,000
10,000,000 - 20,000.000
$200,256,000 - $229.256.000
With respect to the City’s contribution amount of
$104,000,000 above. Dr. Katz advises that DPH has based
this estimate on total costs which DPH expended in FY
.
2004-2005 to provide medical services to uninsured San
Francisco residents. All such City costs will be subject to
appropriation approval by the Board of Supervisors.
With respect to the employers’ contributions estimate of
$30,000,000 to $49,000,000 above, the Budget Analyst
notes that this range of estimated funds is based on a
report prepared by the Controller’s Office of Economic
Analysis on the original File 05-1919, which would
require covered San Francisco employers to make health
care contributions on behalf of their covered employees
The Budget Analyst notes that, while covered San
Francisco employers would be required to make health
care contributions on behalf of their covered employees
such employer contributions would not necessarily accrue
to the proposed HAP. The Budget Analyst further notes
that the estimated amount of $30,000,000 to $49 000 000
IS the ControUer’s total estimate of employer health care
contributions which would be realized under Section
14.1(b)(5) of the proposed Amendment of the Whole. Such
health care contributions could include:
(a) Contributions by such employer on behalf of its
covered employees to a health savings accountlb) Reimbursement by such employer to its covered
employees for expenses incurred in the purchase
of health care services;
(c) Payments by an employer to a third party for
the purpose of providing health care services for
covered employees;
(d) Costs incurred by an employer in the direct
delivery of health care services for covered
employees; and.
board of SUPERVT.SOPC^
BUDGET ANALYST
18
Memo to Budget and Finance Committee
July IF 2006 Special Budget and Finance Committee Meeting
(e) Payments be an employer to the City to fund
health services for uninsured San Francisco
residents (the proposed HAP program, File 060893).
The Budget Analyst notes that, based on the Controller’
s
Office of Economic Analysis estimates, the proposed HAP
mcludes an identified funding source in the Employers’
Health Care Contributions estimate of $30,000 000 to
$49,000,000 which could be expended by employers
any one or combination of five different options and
on
not
necessarily accrue to the proposed PIAP. Therefore, under
the
proposed HAP, employers could contribute nothing^ to
RA.P.
With respect to the Individual Copay Contributions
estimate of $56,256,000 above, the basis for such estimate
IS shown in the table below, provided by Dr. Katz.
Income Level of Uninsured
San Francisco Residents*
Less than 200%
Individual
Enrollment
Copay
$3 per month
$35 per month
$200 per month
Estimated
Size of
Population
Estimated
Annual
Revenue
31,000
$1,116,000
17,000
7,140,000
20,000
48,000,000
68,000**
*Income level is defined
a£.a percentage amount of the Federal Poverty Lilie.
$56,256,000
Between 200% and 500%
Greater than 500%
Total
*ie
Dt. Katz advises that the estmi^d size of the population of 68,000 paving the Individual
Enrollment
Copay is 14,000 less than the estimated 82.000 uninsur;d San Franmsco ^Snts
rmnm"*
2 residents
fwould have theirProposed
HAPexpenditures
because DPH estimates approximately 14 000
uninsured
health
care
paid by their employrs uMer tSe
proposed ordinance and therefore would not pay an Individual Enrollment
Copav.
The Budget Analyst notes that, m its calculation of
$104,000,000 in City Contributions by DPH for uninsured
patients in FA' 2004-2005, DPH further estimated total
collections from uninsured patients to be $2,151,000,
which IS $54,105,000, or 96.2 percent less than the above
estimated Individual Enrollment Copay annual revenues
of $o6,256,000. Under the proposed HAP, patients would
be required to pay Individual Enrollment Copay
based on the individual’s income as a percentage of the
contributions in the amounts specified above, determined
board of SUPERVTSOR.q
BUDGET ANALYST
1 Q
Memo to Budget and Finance Committee
July 11, 2006 Special Budget and Finance Committee Meeting
Federal Poverty Line (FPL).-^ Further, Dr. Katz advises
that DPH anticipates that individuals with incomes which
are greater than 300 percent of the FPL will be the last to
be enrolled in the proposed San Francisco Health Access
Program (HAP).
With respect to the Federal and State estimated funding
source of $10,000,000 to $20,000,000 for the proposed
HAP, Dr. Katz advises that the availability of such funds
will depend on (a) the level of experience of service
providers and their ability and capacity to leverage MediCal funds and (b) future modifications in State and
Federal law which may reduce or increase the total
amount of such funds available to DPH to
:
fund the
proposed HAP. Dr. Katz advises that DPH collected
$22,325,603 in such monies in Calendar Year 2004 to
provide medical services to uninsured San Francisco
residents.
Comments:
1. At the July 5, 2006 meeting of the Budget and Finance
Committee, the proposed ordinance was amended by the
Committee to require DPH and OLSE to report to the
Board of Supervisors by January 31, 2007 on the
development of specific rules to be formulated for the
proposed HAP and for the enforcement and
administration of employer obligations under the
proposed ordinance.
2. The Budget Analyst notes that the proposed ordinance
funding source of $56,256,000 in annual Individual
Enrollment Copay contributions is $54,105,000, or 96 2
percent more than the total estimated collertions of
$2,151,000 from uninsured patients utilizing San
Francisco City health facilities in FY 2004-2005. Further,
as shown in the table on the previous page, $48,000 000
or 85.3 percent of the Individual Enrollment Copay
contributions, would be collected from 20,000 patients
each contributing $200 per month. Dr. Katz advises that
should these patients not participate m the proposed
l^P, DPH would not incur costs for such patients and,
therefore, DPH would not need the Individual Enrollment
Copay contribution revenues from such patients.
“ In F5 2005-2006, the Federal Poverty Line for an individual was annual income of $9,800.
board OF SUPERVTROTf q
BUDGET ANALYST
20
Memo to Budget and Fin<unce Committee
July 11. 2006 Special Budget and Finance Committee Meeting
Recommendation:
Approval of the proposed ordinance is a policy matter for
the Board of Supervisors.
arvey M. Rose
cc: Supervisor Daly
Supervisor Dufty
President Peskin
Supervisor Elsbernd
Supervisor Mirkarimi
Supervisor Alioto-Pier
Supervisor Ammiano
Supervisor Ma
Supervisor Maxwell
Supervisor McGoldrick
Supervisor Sandoval
Clerk of the Board
Controller
Noelle Simmons
Cheryl Adams
BO^D of SUPERVTSOH.q
BUDGET ANALYST
21
CIT''AND COUNTY OF SAN FRANCi
Attachmer
T
GAVIN NEWSOM, MAYOR
DEPARTMENT OF ADMINISTRATIVE SERVICES
OFFICE OF LABOR STANDARDS ENFORCEMENT
Donna Levitt, Manager
1
MEMORANDUM
Date;
To:
From:
Re:
January 27, 2006
Luke Klipp, Office of the Budget Analyst
Donna Levitt
Enforcemenl of the Worker Health Care Security Ordinance
The proposed Worker Health Care Security
, ,Ordinance designates the Office of Labor
Standards Enforcement(OLSE)as the administering
agency,
Functions to be performed by OLSE include •
- develop a procedure and mechanism for the filing of annual renorts
review compliance with the annual reporting requirement
■ assTsse?"^
-eded and any pen^tS^X may be
- monitor compliance with corrective action needed
- defend OLSE findings through the appeal hearing process
- support the Task Force on the health security fee
LSE may promulgate rules necessary for implementation of the ordinance
Based on information from the Tax Collector's Office OLSE assumes that approximately 4000
businesses in San Francisco employ 20 or more people and are covered by the ordinance.
Based on available information, OLSE
enforce the ordinance :
proposes the following staffing and annual budget to
^ ETE 2978 Contract Compliance Officer II
130,000
200,000
70,000
50,000
450,000
2 FTE 2992 Contract Comolianr.P Offiror i
1 FTE 1446 Secretary II
Annual mailing to registered h77.c;inE.QQor~
Total
Computers / phones / office space (one time expensed
City Hall, Room 430 1 Dr. Carlton B. Goodlett Plar-o
22
To) f/H c\ CCA
rs
30,000
J±-
’ ft ■«
Office of Economic Analysis
Economic Impact Report
Worker Healrh^e'Sity Ordinance
File Description;
proven,,ere„l„rce^„?3j
Proposed Ordinance Sumrpary;
ImpaS
with more lhan 19 employees
Mandaleso miFor
nimFor-Profit
um heallhBusinesses
care e^^^Xr
'LTca'io'i’ri'JL''
with overi o «
50% times the City’s Annual 10-Countv
Py 1. nours kmea me
®
"
formula:
employees-
1 “-County He®m'su“erRate°(a"o„°^^^^
“o«s the Cily's Annual
o Fo"Nt°P,re:si„?r3^s^^^^^
di"~;f B--vrnT„form^r
as
employees the
June 23, 2006
Page lone
Executive Summary
While the majority of San Franciscans benefit from health insurance coverage, an estimated
82,000 to 148,000 go uninsured for at least some period of time during the year. Lack of insurance
coverage impacts both residents as well as some non-residents \who commute into San Francisco for
work. The problem of the uninsured is large both nationally and at the state level, where an estimated
one in five Californians are uninsured. This legislation proposes to remedy at least a portion of the
problem at the local level by mandating minimum health care expenditure requirements for San
Francisco-based for-profit covered employers with more than 19 employees working in the city and for
San Francisco-based non-profit covered employers with 50 or more employees working in the city.
Our economic impact analysis projects that an estimated 14,070 to 19,570 people could gain
increased access to health care benefits at an estimated projected cost of $30.9 to $49.0 million in the
first year of coverage. We project that these costs will be'immediately felt by employers and
predominantly by smaller employers with, less than 50 employees, as they currently are jess likely to
offer health benefits to their employees. Over time, however, we project that employees will ultimately
pay, at least part if not all of the cost of these new benefits through otherwise lower wage increases.
Employers operating in a competitive marketplace have limited resource capacity to pay toward
personnel compensation costs (including both wages and fringe benefits). In the short-run, we project
that for some businesses the increased cost of doing business in San Francisco will be greater than is
supportable through price increases or existing profit margins, resulting in estimated losses of between
60 arid 590 full-fifrie jobs. Conversely, 15O‘to'24OTu!l-time heaithcare‘j0bscouid be created if all of the
costs represented increased consumption of health services within San Francisco, assuming no gains
in efficiency in the delivery of healthcare. The combined range in the change in jobs is estimated to be
at the mosi a net gain oi 90 jobs to a potential loss of 350 jobs. This range is relativ'sly minor, as
compared to net job growth in the current economy. As a point of reference, the City experienced
estimated growth of 3,000 to 5,000 net new jobs in 2005, and we project similar job grovirth in the
coming year.
As with any analysis, certain assumptions and survey data were used. A few key limitations or
constraints included:
• limited survey data for the San Francisco jurisdiction with regard to job by establishment
size, so we used the establishment survey data from the California Economic Development
Department even though that data did not disaggregate jobs by part-time, seasonal or full
time;
• limited ability to further project, at a business level, how some specific industries such as
restaurants or temporary services agencies could be uniquely impacted;
• limited ability to quantify the potential positive spillover effects that society may experience
as health benefit coverage rates increase - often cited examples include a more productive,
healthier workforce and savings to the public health safety net;
• uncertainty at an employee level as to how health care expenditures will ultimately be
allocated (e.g. through health savings accounts or insurance with potential co-payment
requirements-)-and-where-that'healtb-care will occur (in San Francisco or outside of our
jurisdiction); and
• uncertainty about what the ultimate composition of resident versus non-resident covered
employees would be.
Given these limitations and unknowns, it seems most helpful to first summarize key risks, then
evaluate the potential impact by stakeholder,
Page 2 of 16
Risk Factor Schedule
Risks
Possible
mitigating actions by local governments
Employers operate in a highly competitive
hirkln^T^"^continually adjust their
hiring decisions based on market wage and
can
•
Consideration of ^
mandated
pass through labor cost increases onto
minimum, or a longer transition time, forspending
smaller
companies as well as
IXt
absorb
significant number of
consumers in the form of higher prices for
"aS to
However
this mandate.
businesses operate with limited
margins, so some business
likely.
profitable industries may help mitigate the ri«;k: nf
many
profit
smaller
Short-,3,“"”’“"^
closures are
Having one jurisdiction with a mandate
tev““tof:o'SaaT"to
loss
for'jobs
costoMSnn^®
increase
the
cost of doing business in San Francisco This
r^T coSld"'
'-set ',ftoe
Thl
f
siir
jurisdiction if other
■ iSSSirS
(CPI)or a regional Labor Cost Index,
Proposed ordinance does not differentiate
r'Sdem
“X
as
can
S
iStl In'"
h r oH .
companies that have
temporary staff and less
non-resident and
•
increasing . health
benefits’“ "for’ non-resident
oyees helps neighboring counties’ public health
subsidizing
neighboring jurisdictions’ public health
needs .
That being said, it may also attract
more
employeespressure
to seek work in the City^ putting
downward
^
®
on wages .
Since a number of smaller businesses
disproportionately have more part-time staff
costs Smi""?
increased
StablishZ
f
establishments survey data suggests.
‘be
The proposed legislation provides a great
deal of potential local remedy for what is a
Z" af'Z'
unknZLSiZesex'St ''™
PflO#» ^ rt C 1 c
P^h,
=%:srh»i“„“^heS
FraadscoslakehelrteraSoocur.
"■
• Consideration of a longer transition time for smaller
part^ me staff may help m,ligate these risks in the short.
Qualitative Net Benefit Ranking
Stakeholder
Description
Extreme
adverse
Moderate
impact
impact
adverse
Neutral
Moderate
favorable
impact
Extreme
positive
impact
City Economy
Covered Employers
NOT Currently
Providing Health Care
Benefits at Mandated
Levels
Covered Employers
Already Paying Health
Care Benefits Above
the Mandated Levels
Covered Employees
.with Health.Care
Benefits Less than
Mandated Levels
-Covered EmplQy.ees
with Health Care
Benefits Above
Mandated Levels
City and County
Government
Page 4 ofie
n ,40
Economic
Effects
If this ordinance passes
Without ordinance
Nearly Neutral Impact:
The Bay Area Economic
i-orum, using data from
t^s ordinance „„ Sa„
M in IhB first yearTfiSeSStr"f't"^economyWide standards is smalfa.; t '
titan ,9 en.ptoyis^llrpSr'"''*"
coverage.
City Economy
the 2003 California
Health Interview Survey
(CHIS)estimated that
in 2003,14^San'
Franciscans were
• Projected 140 to 250
service is provided >unew health care Jobs assuming
uninsured, at some
in San Francisco,
cuti w
employees. ReducSr:?lSv ZJrH^
employees disproportionately
point over a year’s time.
• The San Francisco
Mayor’s Universal
^ ‘ewer-wage
Healthcare Council,
2006,estimated that on
average 82^ persons
were without coverage
per year.
• San Francisco’s
Moderate Adverse Impact-
daytime population is
significantly greater
';5S=E2«=sr,-.
than our resident
due largely
to non-resident workers
commuting into the city
each day. Some of
Covered
Employers NOT
Currently
Providing Health
Care Benefits at
Mandated Levels
Employers with 100 or more employees shall
.
tiealth care expendilOres of nblSi thln^To provide
1
annually
per covered full-time employee^
approximately J,.6 M
Jh rs^S.;)
these workers are
uninsured.
• Using,Metropolitan
Transportation
Commission(MTC)
amp,o^ee^Lt,rSeKXSa"rs'’Sr’^
an amount that exceeds both
’
annually-
proposed mandate levels
currently.
commute pattern
eshmates, total
uninsured resident
(employed and
unemployed)as well as
non-resident
historically the 10-CoLtv
inflation -
7.4% to 8^1o/„ pe?y?aro^erfeStTo 20^years,
compared to an average of 2 5<y fo
the San Francisco Bay Area
°
inflation for
Increase in administrative
health expense records costs as they must maintain
of Labor Standards
compliance.
and report annually to the Office
Enforcement(OLSE)to demorisS
(employed) persons
may total as much as
189,000 over the course
of the year.’
• Employers have been
shifting health benefit
costs onto employees
through increased
deductibles, higher COpayTTients and coinsurance.
per
X 12 months
Page 5 of]6
employees.
per year X# of full-time
^uivalent empJoyees per
Economic Effects
If this ordinance passes
Neutral Impact initially to Moderately Adverse over time.
• No short-term significant impact when employers are spending $2,194
annually per employee, for firms with more than 19 but less than 100
employees, or $3,291 annually per employee, for firms with 1O0 or more
Covered Employers
ALREADY Providing
Health Care Benefits
Above Mandated
Levels
employees.
• Will see some increase in administrative costs as they must maintain
health expense records and report annually to the Office of Labor
Standards Enforcement(OLSE)to demonstrate compliance.
• Potential adverse impact to employers over time if the rate of growth in the
City’s Annual 10-County Health Survey limits the flexibility that employers
have in shifting health costs onto employees through required higher
deductibles, co-insurance and co-payments.
Moderate Favorable Impact;
•
Projected to benefit an estimated 14,070 to 19,570 covered employees
currently uninsured and employed in San Francisco, regardless of
residency.
Covered Employees
with Health care
Benefits Less than
•
Mandated Levels
Incremental benefit per employee (and cost to employer) represents
15.9% to 3.5% of overall total wage costs for firms not currently providing
healWt care benefits, assuming an average wage range of $10.00 to
$30,00-per-hour for.quaiified employees.'*,
•
Depending on the average wage of impacted businesses, we project an
estimated loss of 60 to 590 full-time jobs.
Neutral to Moderately Favorable Over-Time:
Covered Employees
with Health Care
Benefits Above
Mandated Levels
•
Employees expected to continue to benfefit, though employers will now
have a minimum expenditure level that they must provide. This rpay
provide some protection from increased cost shifting, but wilt also likely
otherwise deaease wage growth oyer time.
Neutral to Moderate Favorable Impact:
Reportedly, the ordinance may cost at least $0.48 million in additional ■
costs at the City, primarily at the Office of Labor Standards Enforcement
plus some potentially minor amount of additional operating costs to
Controller’s Office for appeals adjudication.®
Payroll Tax revenues may be impacted depending on the change in jobs.
City & County
Government
Non-profit contracting costs may also be impacted depending on amount
of City funding provided to non-profits to cover incremental costs.
Projected numbers of covered employees who benefit are 14,070 to
19,570 compared to the projected job losses of 60 to 590 (mainly smaller
employers) with potential offsetting new health care jobs of 150 to 240.
Increased coverage may relieve some of the burden on the health safety
net provided by the Public Health Department; however, our assumption
is that these potential savings would be reprogrammed to provide further
unmet public health needs.
‘This range of salary covers hourly wages for most employees who earn at or below the wage median, per recent (Second Quarter, 2005)
Galifomia Employment Development Department Quarteriy Employment and Wages Survey
‘See also the Budget Analyst Fiscal Impact Report on file 05-1919 dated June 1, 2006. Submitted on June 7, 2006.
Page 6 of 16
6/23/2006,12:48 PM
SUMMARY OF
COSTS AND BENEFITS
City Economy
Our office estimates
implementation of this
ordinance
as
currently
°dSd^'Thnstima^fS
colt^t
'"'h
between
$30.9
million
to
$49
0
mNlbn
^^^^ered
mi lion IS projected for City
costs. Primarily related to the Office of Lab^r^stdarSttcemeffi
employers is projected to be
^
™P'°y lower,
of total
rate of $30,00(only a O.Sr/effSSr
"“"iPOny aTiveraStoSy"wage
sSESfIT"
sT;i,-r■ -—n «„
et.
™„0a.e.
'= -I an Insurance nfanOalef^Shlrtr'31^0=,^Snl
S?lnnua«^depenB^“E
benefit SncrSe^TSs EE''’*®''
(0^?? Zrofo^
generally
“"'o aatPloyeesVerebvS Te"'' ^^‘^ation. over
The City’s Annual 10
as have health rthis growth rate
overTml
Pao^ 7
t<
general inflation.
Figure 1 shows the effect of
businesses with many part-time employees offer health
Figure 1
Costs Growth Trends: 1988 - 2007
20.00% n
10-County HSS SuA/ey Rate
Inflation (from SF-CPl)
'Health Insurance Premiums’
^ 15.00% TO
0)
10.00% a
01
re
Qi
5.00%
xz
%
o
0
0.00%
-5.00% ->-■
Sources; Kaiser Family Foundation, 2005 Survey, for Health Insurance Premiums. SF Health Services
System for Survey Rate. BLS for Inflation (SF-CPl).
’ Health Insurance Premium data availaWe up to 2005.
Employers Covered Under this Proposed Ordinance
Table 1 on the follow page illustrates Health Care Benefits by Business Size in San Francisco.
Consistent with studies of Bay Area Employer Provided Healthcare®, most workers who are projected
to be positively impacted by this legislation work in smaller businesses — businesses between 20 to
49 employees.
" See referenced studies in the bibliography by the Bay Area Economic Forum, and by UC Bertreley with Working Partnerships USA.
Page R nf1
t
Care Benefits by Business Size
Businesses hv
Impact of Ordinance
Total
20-49
50-99
100-249 250-499
1000 or
500-999
Total Businesses’
more
42,864
2,594
890
494
144
58
34
144
58
34
Covered Employers
4,214
2,594
890
494
dobs
530,452
UC Berkeley Stud/
% of Employers
Offering Health
Coverage
66,305
87%
95%
86,203
97%
53,928
43,471
63,654
97%
99%
99%
98%
98%
98%
92%
99%
99%
4
1
0
3
1
1
140
35
0
1.124
750
1,872
California Health Care
Foundation Survev
88%
2005^
Kaiser Family
Foundation National
UG Berkeley..Study
95%
74%
Survev. 2005'*
Businesses
Impacted
89,493
—
402
87%
337
98%
92%
45
.
15
California Health Care
Foundation Survev 2on^
371
UC Berkeley Study
14,070
Jobs Impacted
311
11795
45
1575
10
525
California Health Care
Foundation Survey 2005
UC
Berkeley Study
Employer Costs in
i
Millions
(%)
572
10,730
3.353
1.745
$ 30.87 $ 25.88 S 3.46 $
1.15 $ 0,31 $ 0.08 $ 0.00
100.0%
83.8%
11.2%
3.7%
1.0%
% Burden of Cost ^^''fofnia Health Care
Foundation Survey 2005 ^
(%)
100.0%
$ 23,54 5 7.36 $ 5.74
48.1%
15.0%
11.7%
0.2%
0.0%
$ 3.70 $ 2.47 $
7.6%
5.0%
6.16
12.6%
in the United
Survey. ZffOS.' State based
ser 3m,ly Foundaf.on Sun/ey, 2005. National Based Survey.
Pase 9onf;
We expect 48.1 to 83.8 percent of the total estimated $30.9 to $49.0 million in health benefit
mandated costs will fall on businesses employing bebveen 20 to 49 employees. Businesses of 20 to
49 employees are projected to be most affected by the provisions of this ordinance because they are
less likely to provide health benefits currently as well they are more likely to employ lower wage
employees.
Table 2 below illustrates how firms with lower-wage dmployees will be disproportionately
impacted because this new mandate will represent a significant cost over and above the current wage
base in the short-term. For example, a firm with an average wage of $10 per hour will see their
personnel costs increase by 10.6 to 15.9 percent with the implementation of this ordinance.
Table 2. Firms \with Lower Average Wages Impacted More
100 or more employees
(75% of 10-County Rate)
Minimum
Average
tWage
Minimum
Health Care
% Of Wage
Expense
Required^
Hourly
Monthly
Scenario A
Annual
Scenario B
■
$
$
10
1,720
20,640
Hourly
$
Monthly
-$
$
3,440
41,280
$
30
Annual
Scenario C
$
Hourly
Monthly
Annual
$
$
20
5,160
6-1,920
$
1.59
$
$
274.25
3,290.94
1.59
$
$— 274.25
$
3,290.94
$
1.59
$
$
274.25
3,290.94
>19 to <100 employees
(50% of 10-County Rate)
Health Care
% Of Wage
Expense
Required^
15.9%
$
$
1.06
182.83
10.6%
$ 2,193.96
1.06
$
-S.0%-..- $.
-182.83
$ 2,193.96
1.06
$
..5.3%
5.3%
$
182,83
$
2,193.96
3.5%
CCSF 10-County Survey Rate for FY 2006-07
$ 365.66
Implied Hourly Rate("the Rate”) for Health Care expense per employee per hour
Implied Annual Health Care Expenditure /employee
$
2.13
$4,387,92
1. Expense required is 75% if“the” Rate, for businesses with >100 employees
2. Expense required is 50% if"the” Rate, for businesses with >19 & <100 employees
These cost increases may be absorbed by some employers or passed onto customers
through higher prices. However, other employers will find these alternatives less possible and will
choose to cut jobs or hours worked or possibly dose their businesses altogether. To estimate the
impact of Job losses, we have summarized in Table 3 on the following,page the projected reduction in
total hours worked. For example, a business that has an average hourly wage of $10 and employs
more than 19 but less than 100 employees would likely cut total labor hours by between -1.06 to -3.19
percent to offset the additional costs associated with increased health benefits. This estimate assumes
that businesses are unable to cover these additional costs through achieving other expenditure
efficiencies, otherwise lowering profits or through higher prices to customers. This reduction in the
demand for labor can be translated into job losses by taking the # of affected jobs (estimated to be
^between 14,070 and 19,572) times the labor reduction factor of -1.06 to -3.19 percent - yielding
estirnated Tdsses bf 150 to 620 jobs: ^
The significance is really that the proposed ordinance more significantly impacts smaller
employers, since they hire a greater proportion of the lower-wage workers in the Citx. Also, because of
the competitive nature of the marketplace, our projections assume that costs of providing higher
benefits cannot entirely be passed through to the customers by increasing prices, nor that a firm's
owner will be able to cover increased costs by reducing profits.
K/')inrd\A
Table 3. Changes to Jobs:%
' Reduction Yielding 60 to 590 Job Losses
loo or more
ripS
employees
>19 to <100 e
High elasticity
High elasticity
demand for of demand for
Wage
Hourly
Scenario A
Monthly
$
5 1,720
$ 20,640
Annual
Hourly
Scenario B
Monthly
$
-1.59%
Hourly
Scenario C
Monthly
-1.78%
-1.06%
-3.19%
-0.53%
-1.59%
-0.35%
-1.06%
20
$ 3.440
$ 41,280
Annual
Of demand for
—!§bor_-0H
.Q 3
i,• n Demand for Labor
ggtimated %
10
mployees
-0.80%
-2.39%
30
$ 5,160
$ 61,920
Annual
-0.53%
-1.59%
Table 4 shows the distribution
coverage total costs that firms
employees) will face under this proposed ordinanS
care expense
of differenT*Les°"(mtasurl^^ number
minimumof health
full time
- equivalent
Table 4. Schedule of Minimum Health Com p
Employers Under the Health cfre sTcur^
Covered Employers’
gstablishment Sim
o
.S
—.
®
os >■
c
®> .
:z3
» ■<
<2 OSl
JS
20
30
$
40
50
60
70
80
90
100
150
200
250
500
1000
Care Expensp
Hourly
Monthly
Annual
21.26
$
3,657
31.89
$
$
43,879
5,485
$
65,819
$
42.52
$
$
7,313
53.15
$
$
87,758
9,142
5
109,698
$
63.78
$
$
10,970
74.41
$
$
131.638
12,798
$
153,577
175.517
$
85.04
$
$
14,626
95.67
$
$
16.455
159.44
$
$
27,425
$
329.094
493,641
$
197,456 _
$
239.17
$
$
41,137
318.89
$
S
54,849
$
658,188
68,561
.$
822,735
1,645.470
3,290.940
$
398.61
$
797.22
$
$
137,123
1,594.45
$
$
274,245
$
over time.
Employees Covered Under this Proposed Ordinance
Employees who currently do not receive health benefits will benefit greatly from this ordinance
in the immediate future. An estimated 14,070 to 19,570 employees will be positively impacted. The
proposed ordinance results in additional health benefit expenses on behalf of employees that amount
to 3.5 to 15.9 percent increases in total compensation, depending on the average wage of the firm.
Based upon our review of labor economic research, increased wage costs result in reductions to labor
of 0.1 to 0.3 percent for each 1.0 percent increase in total compensation costs. Thus, the positive
impacts on employees by this ordinance will be partially offset by estimated job losses of 60 to 570.®
While job losses are projected to occur primarily among smaller employers, as they disproportionately
do not currently provide health benefits, some job gains are also expected in the health care industry.
Depending on the rate of incremental health care spending that occurs within San Francisco, job gains
in health care could range from 150 to 240.
City & County Government
The Budget Analyst’s Report dated June 19, 2006, outlines a projected fiscal impact of $0.48
million due to higher administrative costs associated with oversight of company health care expense
reporting. In addition to these costs, the City’s payroll taxes could be impacted depending on the
number of general job losses versus health care job gains. The City may also be indirectly impacted to
the degree that non-profits that contract with the City see increasing health benefit mandated costs. In
some cases, these increased costs may be passed through to the City’s General Fund.
The City, as the public health safety net provider,, is .also projected to benefit as more people
have access to health care. Since the cost of the uninsured falls largely on taxpayers as well as the
insured through higher premiums, the City should see at least some reduction in the rate of safety net
spending growthrWhen businesses fail to cover their ernployees,..taxpa.y.ers.ultimately bear the burden
of providing care. This also nneaos,that businesses that do not offer insurance have a cost advantage
over competitors that do, effectively adding to the burden of taxpayers. This ordinance helps to
eliminate the implicit subsidy being afforded to firms that do not offer benefits as well as levels the
playing field to their peers that already provide coverage.
This proposed ordinance would also have some effect on increasing the demand for public
health care services in San Francisco by both City residents and covered employees residing in
neighboring counties. That being said, depending on how much incremental spending the projected
$30.9 to $49.0 million represents, some need for expansion of health care resources—capital and
jobs— to ensure access may occur.
This legislation also creates spillover benefits for neighboring jurisdictions whose residents
are
employed in San Francisco if working in San Francisco means that they are more likely to have health
benefits and less likely to be a burden on their.jurisdiction of residence public health system. While the
costs to San Francisco businesses should provide benefits to their employees, it will at the same time
provide an implicit subsidy to a worker’s place of residence whether that is in or outside of San
Francisco County.
The demand elasticity of labor is a number that measures how sensitive employers are to a change in the cost of hiring. We can use this
concept to estimate the impact of a reduction in the cost of labor on employment. For example, if the demand elasticity of labor were -1, a
1% dewease in payroll costs would increase employment by 1%. Economic studies such as the ones in the bibliography and quoted in the
next footnote suggest the demand elasticity of labor is between -0,1 and -0,3.
«'
Conclusion
cannot afford coverage will lose their jobs.
Jjostslincludinfb'I'wIgennTMngetoefiS^^^^^^^
^^
that work for firms that
Appendix A: Summary of SB 840 (Kuehl) - California Health Insurance Reliability Act
Governance: A Health Insurance Commissioner, elected every eight years with a two-term limit, will supervise
the California Health Insurance Agency, which administers the California Health Insurance System. The
Commissioner appoints the Deputy Health Insurance Commissioner, the Health Insurance Fund Director, the
Consumer Advocate, the Chief Medical Officer, the Director of Health Planning, the Director of the Partnerships
for Health, the Director of the Payments Board, and the Regional Health Planning Directors.
Health Insurance Policy Board; Chaired by the commissioner, includes the seven appointed state officers the
state public health officer and two representatives from Regional Planning Boards. A Public Advisory Committee
to advise the board, representing doctors, nurses, hospitals, dentists, health practitioners, pharmacists mental
health providers, consumers, businesses, and labor will be appointed by the Assembly the Senate and the
Governor.
The Health Insurance Policy Board;
•
Establishes scope of services.
•
Determines need for change or increase in health Insurance premiums.
♦ Sets priorities and guidelines for evaluations, research, capital investment, and public input.
Office of Consumer Advocate; Responds to and facilitates consumer complaints and suggestions Establishes
Independent Medical Review System to provide examinations of disputed health care services Collaborates in
forming Partnerships for Health.
Office of Health Planning; Plans for the health needs of the population, establishes system performance criteria
Identifies health outcome disparities and service shortages and recommends corrective steps establishes
statewide health care databases to support planning and performance review, plans for system caoitat
investments, and links state and private research to health system goals.
Office of Health Care Quality: Headed by the cMef medical officer, sets standards of best medical practice
recommends an evidence-based formulary for pharmaceuticals and durable equipment, identifies treatments and’
medications that are safe and effective, recommends means to achieve an appropriate ratio of oeneral
practitioners to specialists. Collaborates in forming Partnerships for Health.
Health Insurance Fund: Receives and disburses all monies to be expended on health care.
Payrnents Board; Composed of finance and insurance experts and representatives of commissioner and regional
directors. Plans compensation for upper level private health care managers, and health care providers Three-
negotiations with health care facilities and representatives of provider
groups°^^^"^^^'°"
ProyMers may choose fee-for-service compensation or salaries within health care systems. Facilities, integrated
health care systerns and group medical practices can
capitated or non-capitated operating budgets
Payments may include bonuses for meeting the goals ofchoose
the system. Employee unions will negotiate with the
rsyionsi director.
inspector General of the California Health Care System; Establishes an inspector general, in the office of the
Attorney General, and appointed by the Governor, with authority to invesUgate fraud or misconduct by employees
^ ^
of the Health Care Agency, or by providers or consumers.
Hralth Care Regions; Up to 10 regions are established by the commissioner, headed by Regional Health
P anning Directors with funding established by the commissioner,
to support local decision making in the health
planning process. Patients may receive care in more than one region.
Each region has a Partnership for Health.
^Partnerships
for Health: Establishes
^
-
in. the California Health Insurance Agency and in each region by
and the regional advocates and
directors. r
Each Partnership for Health supports health maintenance, Officer,
disease
prevention, good communication
between patients and providers, health education and
better quality of care.
Transrf/on; A transition Commissioner of Health Insurance, appointed by the Governor with Senate confirmation
''
®P
system with retraining and job placement.
^ transition advisory group, the transition commissioner will
help ffiecl the system, oversee the transition from
P®'"°es displaced from employment
by
the new
^
’
state
Care Fund. No
dLn^'i!^®
interpretation, immunizations^
education, hospice care home heaur”^^
p“v"d?rs'IS ™!I“f
private hospital rooms with no medical indication
care by unlicensed
LreS„;i:SSetIThe^::Srpr^ no proven medical value. Chief Medical Officer may authorize
ta
innovation,
and workforce development.
and pravider
budgets
(or both fee-for-service
budgets), capital
investment,
purchasing,
research and
^
commissio^ner andandrejionaf
dS'^rArcIpifaTinv^^^^
large medical equipment'^33^
l^mmissioner wil] establish standards for small caoital PYnonH r
°
^'^'^^’'^^nce
with plans made by the
improvements, land and office
capital planning guidelines. The
The'^svT^"'^f^^"
minimize
operating budgets. Capital
Thj
system wj not pay
fo.^^^^^unneeded expansion^ faciirties anri^tservices, through
and correct
health care disparihes
amrn^hliT"'^®^
ot health care, administration
among health care providers, and education of patients.
of the system. communication
graw'™
“'P “''prall Pbsls wilhin
PpoputebS''
pulbtiOb growth, Slatewids or rogiooal cost ooblaioment
mothoOswiror maSfe
■ AdSCrSvrrS^^^^^^^
• Limiting provider reimburs^mTntc 0..°
P'P-PPtary decrease in benefits,
for inappropriate utilization.
• Deferred funding of the Reserve Account^ specified amount of aggregate billing.
• Negotiating bulk purchasing of pharmaceuticals and medical equipment,
Limiting aggregate reimbursements '
to pharmaceuticai manufacturers,
• Avoiding regional duplication of expensive
services,
• Imposing a waiting period for new residents, if a large number of
purpose of obtaining health care,
•
people are entering the state for
the
Establishing consumer
co-payments.and/or deductibles if
limited to $250
necessary, only after the first two years, and
per person or $500 per family The
commissioner shall establish standard s for waiver of copayments for those with low income
When cost control
care taxes.
measures are insufficient: Commissioner
may ask the Legislature for an increase in health
hS^Cs'I!!'S'VNr;irstp;TLTr.-Sy^
w»rbe rea„oca,ed »,e 3.3,e
allocation of federal dollars to the state Health Care Fund
funding. Federal waivers are required for
n^ow'paid 7onr^^T
i^^^^ance premiums now paid to in^mncTiomoT'^'"® '"h co-pays and deductibles
familiL ni .P'^°'^'9ers. Premiums will be affordable for every Califom?^^^^^
^ilies pay is in proportion to their income and what emnln^o^ ^
business because what
efflcences conlrcl costs. Most businesses and families wIK mollj,
Prepared by Devin Carroll(HCA-Central California) 8/28/2005
'’™''°rilon to wages. Single-payer
Bibliography
1. 2003
MSA
Business
Patterns
bin/msanaic/msadetl.pl
2. 2005,
Economic
Performance
Data.
(NAICS).
http://censtats.census.qov/cQi-
California
Department
of
Finance.
http://www.dof.ca.qov/
3. 2005. Employment Development Department Data. California Employment Development
Department, http://www.edd.ca.aov/
4. California Health Care Foundation, 2005 Employer Health Benefits Survey.
5. Cutler. David M.. “Employee Costs and the Decline in Health Insurance Coverage,”
Working Paper No.9036. National Bureau of Economic Research. July 2002.
6. Cutler, David M. and Jonathan Gruber, "Does Public Insurance Crowd Out Private
Insurance?” Working Paper No. 5082. National Bureau of Economic Research. April, 1995
7. Dravone, David, Kathryn E. Spier and Laurence Baker, “‘Competition’ among employers
offering health insurance,” Journal of Health Economics, vol. 19, No. 2, pp 121-140
Elsevier Science B.V., 2000.
8. Dube, Arindrajit and Ken Jacobs, “Declining Job-based Health Coverage in the United
States and California, Working Paper. Working Partnerships USA, U.C. Berkeley Center
for Labor Research and Education. January, 2006.
9- .Federal Reserve Economic Database. FREDll, Federal Reserve Bank of Saint Louis
(Online).
10.Gruber, Jonathan and James Poterba, “Tax Subsidies to Employer Provided Health
• insurance.” Working Paper No. 5147. National Bureau of Economic Research. June.
1995.
1Jj;^ruber, .^nathan, “Health Insurance and the Labor
4.
MarKet
■l^affdnal Bureau of EcdhoWc~ResMfcbT~Oc4bbef^^^
«
Working Paper No. 6762.
12. Gruber, Jonathan and Larry Levitt, “Tax Subsidies for Health .Insurance: Costs and
Benefits," Health Affairs, vol. 19, no. 1. Project Hope, 2000.
13.Hamermesh, Daniel S. 1993. Labor demand, Princeton, NJ: Princeton University Press
14.Institute of Medicine, Care Without Coverage: TOo Little. Too Late. National Academv
Press, May, 2002.
^
15..Memorandum: Fiscal Impact Report on file 05-1919. Office of the Budget Analyst. June 1,
2006.
16.Neumark David and William Wascher. 2000. Minimum Wages and Employment- A Case
Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment American
Economic Review 90{3): 1362-1396.
17.Richard Kronick and Todd Gilmer, "Explaining The Decline in Health Insurance Coverage
1979-1995.” Health Affairs, vol. 18. no. 2. Project Hope, 1999.
^ ’
18.Shore-Sheppard, Lara, Thomas C. Buchmueller and Gail A. Jensen, “Medicaid and
crowding out of private insurance: a re-examination using firm level data ” Journal of
Health Economics, vol. 19, No. 2. pp. 61 - 91. Elsevier Science B.V., 2000.
19.Thorpe, Kenneth E. “Employer Mandates and the Health Care Crisis’: Economic impacts in
CaiiTornia and the Bay Area." iVianuscript by the 8av Area Economic Forum Mrsmi^rrint
Supervised by R. Sean Randolph. January 2006.
20.Woolhandler, Steffie and David U. Himmelstein, “Paying for National Health Insurance—
And Not Getting It.” Affairs, vol. 21, no. 4. Project Hope, 2002
N:\ANALYSIS\Of<ice ol Economic AnalysisVpending legislationXheal th care security 051919\OEA Economic Impact Analysis for 051919 draft I - FINALdoc
Document
Ordinance amending the San Francisco Administrative Code to add Chapter 14 Sections 14.1 through 14.8, to provide health care security for San Francisco residents by creating a public health access program for the uninsured, requiring employer paid health expenditures, identifying options for how an employer may make such expenditures, creating an advisory health access working group, and setting an operative date
Initiative
Collection
James T. Beall, Jr.
Content Type
Ordinance
Resource Type
Document
Date
07/05/2006
District
District 4
Language
English
Rights
No Copyright: http://rightsstatements.org/vocab/NoC-US/1.0/