Court Upholds Employer Health Care Responsibility Policies

In a case with national implications for state health reform across the country, the Ninth Circuit Court of Appeals this week in Golden Gate Rest. Ass'n v. San Francisco upheld the employer responsibility provisions of the San Francisco universal health care plan.  The decision follows a preliminary decision earlier in the year that allowed the plan to be initially implemented.

This decision allows the city's Healthy San Francisco plan, the most universal health care plan in the nation, to continue to operate.  Key to the plan, along with better coordination of existing health care resources, was a funding measure that requires businesses with twenty or more employees that do not provide health care to their employees to pay $1.17 to $1.76 per hour to the city in order to cover their employees' costs under the city-provided health care plan.

Opponents had argued that this employer responsibility provision was preempted by the federal ERISA law, which governs certain health care and pension plans, but the court emphasized that "state and local laws enjoy a presumption against preemption" when they operate in areas of traditional state concern.  And as the Court noted, provision of health services "has long been the province of state and local governments." 

The Court distinguished the San Francisco law from a Maryland law, which was held preempted by ERISA because it had required very large employers to spend 8% of their total payroll on health insurance or pay the same amount to the state.  Whereas the Maryland law gave employers and their employees nothing in return for those fees paid to the state, the San Francisco law enrolls all uninsured employees for whom fees are paid in the city health plan, giving employers and their employees a clear benefit for the fees.  For this reason, the Ninth Circuit ruled that the San Francisco plan was not an attempt to force employers to provide an ERISA health care plan but a reasonable regulation with clear benefits for employers and city residents.  This is supported by the fact that 950 employers in the city have already enrolled their employees in the city health plan.  

The court decision is also good news for the Massachusetts health plan, since that plan also includes a more modest employer responsibility provision and the state has just increased the funds it is collecting from employers to assure full funding for its program.  The Ninth Circuit Court of Appeals also provides far clearer guidelines for all legislators working to create "health care for all" plans that include employer responsibility components.


Ninth Circuit Court of Appeals, Golden Gate Rest. Ass'n v. San Francisco
Healthy San Francisco - Our Health Access Program
Progressive States Network - Ensuring Affordability of Employer Mandates
Progressive States Network - San Francisco's Landmark Law
AFL-CIO - Fair Share Health Care
UC-Berkeley Labor Center - Declining Job-Based Health Coverage for Working Families in California and the United States