San Francisco lawmakers drop attempt to change health mandate

SAN FRANCISCO—San Francisco lawmakers voted Tuesday to drop a measure that would have modified one way that employers can satisfy a city law requiring them to spend a certain amount of money on employee health care coverage.

Under the law, employers with 100 or more employees are required to spend $2.06 per covered employee on health care, while employers with 20 through 99 employees must spend at least $1.46 per hour. Employers with fewer than 20 employees are exempt from the requirement.

The overwhelming majority of employers satisfy the requirement through the payment of group health insurance premiums.

However, the law also offers an alternative in which employers contribute the required amounts to health reimbursement arrangements, which are used to reimburse employees for health care expenses. At the end of the year, unused funds revert back to the employer.

Proposed amendment withdrawn

Last month, David Campos, a member of the San Francisco Board of Supervisors proposed to amend the requirement so that unused HRA funds automatically would roll over to the next year.

The proposal was generated by a June report by the city's Office of Labor Standards Enforcement that found that only 20% of the $62 million allocated to the plans last year was actually reimbursed to employees.

But Supervisor Campos withdrew the measure Tuesday because, observers said, he lacked the votes necessary to approve it.

13% use HRA approach

In all, about 13% of employers last year used the HRA approach to satisfy the spending requirement, according to the Office of Labor Standards Enforcement report.

The legality of the 2006 law, which went into effect in 2008, was affirmed by the 9th U.S. Circuit Court of Appeals. In 2010, the U.S. Supreme Court declined to review the appeals court ruling.