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Opinions and views from expert CFOZone members.

Jul 01

Supremes rule against employers

Posted by Smerd in Supreme Courthealth insurancehealth care reformhealth carebenefits


The Supreme Court this week rejected a challenge by employers to San Francisco's universal healthcare program. The justices denied an appeal from the Golden Gate Restaurant Association of a lower court ruling that upheld the program's requirement that employers help pay the bill or give their workers health coverage.

The significance of the decision means foremost that San Francisco's health care mandate does not violate federal ERISA law allowing multi-state employers to design benefits for their employees as they see fit.

It also sowed some confusion among employers over their responsibility in light of national health care reform. As the San Francisco Examiner reports, business owners, like Dan Scherotter, owner of Palio d'Asti in downtown San Francisco, "said he is disheartened by the Supreme Court's decision."

"'The real confusion is going to be in 2014 when the national healthcare kicks in," Scherotter said. "The fact we will have to meet both mandates will be pretty onerous and not good for The City's future of its largest employer - restaurants.'"

Since ERISA does not protect employers in San Francisco from having to pay into the city's health fund, employers worry that beginning in 2014, they will be responsible for paying into both the Healthy San Francisco program and the national health care program.

The Obama administration argues that national reform will make Healthy San Francisco unnecessary, allowing it to shut down. But until that decision is made employers that do not offer health care could conceivably have to pay toward the San Francisco program as well as penalties if their employees receive subsidies to buy health insurance on their own through the forthcoming national health insurance exchanges.

The city's universal health care system, Healthy San Francisco, covers53,000 city residents. Employers that do not provide health benefits must pay into a system that offers uninsured people access to health clinics.

The Supreme Court's decision not to weigh in on the issue is a clear victory not only for the City of San Francisco but the Obama administration, which had filed an amicus brief asking the court to abstain from any ruling. The administration argued that thanks to national health reform, San Francisco's system was simply a stop-gap measure that should be kept in place until 2014, when the bulk of the national reforms go into effect.

But, as I argued here, the subtext is less legal than political: a ruling against San Francisco by the Supreme Court would have given political momentum to others who are seeking legal means to strike down the national law.

Employers in San Francisco were clearly disappointed by the decision. They, like employers elsewhere, must begin to consider the new reality: if employment is to continue to be the source of health benefits, employers everywhere will be obligated to some degree to provide it.

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