GGRA Challenges Universal Health Benefit Law

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. October 14, 2008

SAN FRANCISCO, CA, November 8, 2006. The Golden Gate Restaurant Association today asked a federal court to strike down the employer mandate component of San Francisco's health benefit ordinance in a move the industry group had worked for more than a year to avoid.

In a motion filed in U.S. District Court in San Francisco, the Golden Gate Restaurant Association (GGRA) charged that San Francisco's Health Care Security Ordinance clearly violates existing federal law governing employer health care benefits.

"GGRA strongly supports expanding health care coverage for all San Franciscans, but we need a reasonable plan that doesn't run afoul of federal laws and doesn't place an unfair financial burden on employers," GGRA Executive Director Kevin Westlye said. "Not only does the City's law violate federal statutes, but the onerous cost it imposes will hurt many small businesses and damage our local economy."

Specifically, the GGRA argues that the City's ordinance conflicts with the federal Employee Retirement Income Security Act (ERISA), which sets national standards for pension and health plans in private industry. By providing national standards, ERISA avoids a messy patchwork of local and state laws.

"It is illegal for individual municipalities to mandate that employers pay for health insurance," Westlye said. "Health care is everyone's responsibility, not just the employers. We proposed several funding mechanisms for universal health care. All were rejected an in there place is a punitive system where one group pays -- the employer."

San Francisco's Health Care Security Ordinance requires employers with 20 or more employees to pay a fee for each hour an employee works. The GGRA had hoped to avoid taking its complaint to the courts. The industry association spent more than a year attempting to negotiate an alternative to the employer funding mandate. However, both city elected officials and labor leaders rebuffed GGRA's repeated efforts to look at several other funding options, including a quarter cent sales tax.

"We're disappointed that most of the Supervisors and labor refused to discuss new ideas for solving a very complex and expensive national problem," Westlye said. "Instead of considering ways for providing affordable health care that include meaningful controls on costs, they have reverted to the same old tired and unworkable method of pushing more costs onto employers."

The City's Health Care Security Ordinance doesn't contain a single word on managing costs. "Any effort to reform our health care system must address cost and how we control skyrocketing health care costs," Westlye said. "San Francisco's program doesn't get there, and simply assigning employers the cost of a new program is not true reform."

The GGRA's action is similar to one taken earlier this year by a Maryland retail industry association against a state law that it argued conflicted with ERISA. A federal judge in July agreed with the Retail Industry Leadership Association and invalidated that law, which also sought to charge employers for mandated health care coverage.