Appeals Court Rules in Favor of Healthy San Francisco Plan

A three-judge panel of the 9th U.S. Circuit Court of Appeals on Tuesday ruled that San Francisco's universal health care program can continue because it does not violate federal regulation of employee benefit plans, the San Francisco Chronicle reports (Egelko, San Francisco Chronicle, 10/1). The ruling overturned a lower court decision that the Healthy San Francisco plan placed requirements on employers in violation of federal law (Dearen, AP/Houston Chronicle, 9/30).

Healthy San Francisco was approved in 2006 to provide access to health care services at city clinics and public hospitals for the city's uninsured residents. The program requires private companies with at least 20 employees and not-for-profit groups with at least 50 employees to either provide health care benefits to workers at a cost that meets minimum spending levels or help cover the cost of Healthy San Francisco (San Francisco Chronicle, 10/1). According to the city's latest statistics, more than 29,000 city residents have enrolled in the program (AP/Houston Chronicle, 9/30).

Employers represented by the Golden Gate Restaurant Association filed a lawsuit against the city claiming that the program violated the federal Employee Retirement Income Security Act, which preempts certain state and local governments requirements regarding employer-sponsored benefits (Lifsher, Los Angeles Times, 10/1). The Bush administration in April filed arguments in the lawsuit, stating that the ordinance that created Healthy San Francisco was invalid and would create "a potentially bewildering and conflicting array of mandates" (San Francisco Chronicle, 10/1).

In the ruling, the judges found that "the spending requirements do not establish a ERISA plan" (Los Angeles Times, 10/1). According to the AP/Houston Chronicle, the panel "stressed that it was not ruling on the wisdom of the plan, but only the legality of the mandatory employer fees" under ERISA. In the court's opinion Judge William Fletcher wrote, "We are asked only to decide whether ERISA pre-empts the employer spending requirements," adding, "We hold that it does not" (AP/Houston Chronicle, 9/30).

Reaction
City Attorney Dennis Herrera said, "We're very gratified," adding, "We think our arguments are right on the law, and we really provided a road map as to how states and localities can provide comprehensive health care coverage" (McKinley, New York Times, 10/1). San Francisco Mayor Gavin Newsom said, "Today's ruling is a huge victory for the city and for the 46 million Americans who don't have health insurance," adding, "San Francisco is proving that it can be done. By thinking outside the box, every city and state in this country can provide health insurance if they are willing to challenge the conventional wisdom" (Los Angeles Times, 10/1).

Kevin Westlye, executive director of the restaurant association, said it is "likely" that the group will appeal the decision (Ortiz, Sacramento Bee, 10/1). He said, "If this stands, many counties and states will pass their own employer expenditure rulings, going against why Congress passed ERISA in the first place" (AP/Houston Chronicle, 9/30). Daniel Scherotter, president of the restaurant association, said, "This is the first decision ever in an ERISA case going in that direction," adding, "I think if you ask anyone, even Dennis Herrera, they would think that he would lose" (New York Times, 10/1).

Daniel Zingale, a senior adviser to Gov. Arnold Schwarzenegger (R), said, "I think this case strengthens the governor's case for having a shared responsibility" for health insurance coverage that includes employers (Los Angeles Times, 10/1).

Howard County, Md.
In related news, Howard County, Md., on Wednesday will begin enrollment in the Healthy Howard program, which aims to increase access to health care for uninsured county residents, the Washington Post reports. In its first year of operation, the program will be open to 2,200 of the nearly 15,000 county residents without health insurance. County officials said they hope to increase enrollment in the program by 2,000 people annually in the following years. The county has allocated $500,000 to fund the first year of the program, and additional funding will come from foundation grants and other private sources. County Executive Ken Ulman said about 60% to 65% of the program's cost will be funded by fees beneficiaries will pay (Aratani, Washington Post, 9/30).

To be eligible for the program, individuals must have lived in the county for at least one year and must have been uninsured for a year. Families also cannot be eligible for state or federal health programs and must have incomes lower than 300% of the federal poverty level. Undocumented immigrants are not eligible for the program. Residents with incomes at or below 200% of the poverty level will contribute $50 per month for coverage, and those with incomes up to 300% of the poverty level will contribute $115 per month. The program is expected to cost $2.8 million in its first year, and residents' contributions will cover about half of the expenses (Kaiser Daily Health Policy Report, 10/18/07).

Under the program, members will be eligible for at least six physician visits annually, inpatient hospital care at no cost, mental health care, low-cost prescription medications and other medical services. Women will be entitled to an additional ob-gyn visit, and all members will be assigned advisers to work with on their health plans. They also can contribute an additional $1.65 per month for access to basic dental care. County officials noted that Healthy Howard is not a health insurance program and it does not work beyond county limits.

Ulman said, "The vast majority of our plan will work," adding, "There's no question that people who don't have access will have access. Some of this plan will most likely not work as we want. That's why we wanted to limit (enrollment) this first year. We wanted to have the ability to retool, to make sure we create a system that works" (Washington Post, 9/30).