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A Tale of the (Insurance) City

Jan
10
2006

So far the proposal by gay comedian turned San Francisco Supervisor, Tom Ammiano, to force San Francisco employers with more than 20 employees to pay for their employees’ insurance is getting the kind of response that you’d expect. The headlines read that Merchants blast plan to require health care, and why wouldn’t they?

It is, of course, not going to work. The ordinace might not get vetoed by his Gavness, but it’ll end up in court, and even if it does pass, the one comparable example, Hawaii, which has had mandatory employer-funded health insurance for three decades, still has lots of uninsured people — even if it’s tough to move most local businesses over the state line! But this issue is a microcosm for the crisis in American health insurance, and it gives an excuse for a little more explanation about the various attempts like Ammiano’s to get to fewer uninsured by attacking the problem in the workplace.

More than 80% of the uninsured are in families with either a full-time or part-time worker. That’s why getting employers to cover their workers is such an attractive way of getting at the uninsured. (By the way, this type of policy approach is called, in health care policy wonk vernacular, “pay-or-play”). Ammiano’s actual proposal is a little vague but he has been explicit about this being an attempt to reduce the amount that San Francisco spends on uninsured people at its General Hospital by up to $20 million a year.

As it’s now written – and Ammiano has signaled that he’s willing to negotiate – the proposal calls for a payment of $345 a month per employee working more than 80 hours a month to be put into a fund to be used for care. The $345 number is designed to stop employers buying a “lite” insurance product which leaves employees under-insured.

Now, business groups in the city will have no trouble finding a restaurant that’s bound to go under, sending a platoon of bus-boys onto the bread line. But Chamber of Commerce rhetoric aside, there are some sensible objections to a city-wide pay-or-play policy. The first is geographic: Half those employed in city businesses don’t live in San Francisco and many of those who live in the city work outside it. On top of that, many of the employees who do not get insurance at their businesses get it elsewhere as part of the employment package of a family member.

But the first objection is why a local solution for health care uninsurance can’t work. Try as it might – and it tries hard – San Francisco city government can’t force businesses outside the city to provide insurance for their employees who live in it.

So why are we having this debate in San Francisco? Well a couple of years back the Democrats in the California state assembly got a state-wide pay-or-play bill onto Gray Davis’ desk moments before the voters tossed him out. He signed it. But the state’s business interests put the law on the ballot, Proposition 72, the next year, and you can guess what happened. Just as we’re about to see in San Francisco, Californianis saw a plethora of articles saying that workers would be put on the street as poor employers couldn’t afford to keep them on with the huge added burden of health care added to wage costs.

Unfortunately for those making that argument, the evidence is pretty much in on this subject: An increase in the “living” wage as seen in several US cities (and more notably its nationwide introduction in the UK) in the late 1990s had no impact on the level of employment. Employment levels, as anyone who’s ever looked for a job knows, are not much dependent on prevailing wage rates, but rather on the state of the economy and to some extent legal restrictions on firing workers.

But of course this isn’t really about the hard done-by small business that won’t be able to afford it. Real small businesses aren’t even covered by Ammiano’s legislation, (and that’s a problem in and of itself). This is instead about the big businesses that employ lots of low-wage workers—in other words, fast food chains and Walmart.  No surprise: They were the businesses that funded the No on 72 campaign, which just squeaked a victory for every American corporation’s right to have high margins and pay low wages — even though Costco shows you can be successful without doing it that way.

But why did California need to look for a state-wide solution it at all? Well that’s because the Federal government tried to solve the uninsurance problem in 1994 and failed. President Bill Clinton’s health plan was a version of pay-or-play, with an additional policy for the 20% of uninsured Americans not in a family where someone’s working. But in order to get everyone working covered, Clinton’s plan asked for all employers to pay for health care for all their employees. Like Prop 72, that idea never survived the small business lobby and Rush Limbaugh’s assault on it. So ever since state and local governments have to deal with the human and real fiscal costs of uninsurance.

That gets us to the next problem with state-wide solutions. They, too, are ineffective. Let’s face it, no one is locating in San Francisco for low labor costs, and restaurants here can pass on the extra costs to their customers — sorry, your $27 entree will now be $28.50.

But capital is mobile enough and jobs do move to cheaper labor states or more receptive suburban locales, not to mention the dreaded out-sourcing of low-wage jobs like telemarketing to counties were health insurance is never mentioned as a company benefit. That’s why at some point – and hopefully some point soon – the nation as a whole has got to decide that this is a national problem that needs a national solution. And part of the solution has got to be an equitable sharing of the burden of insurance costs between different employers — even if it’s done by taxing individual workers, and getting rid of the employers’ role in health benefits altogether. And no city can do that alone.

Share  Posted by Matt Holt at 11:43 PM | Permalink

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