As you may have heard, the City of San Francisco has decided to provide access to healthcare for all its inhabitants, including about 82,000 uninsured and undocumented workers. How will they pay for this? Time magazine reports:
Annual funding for the $203 million program will come from re-routed city funds (including $104 million that now goes toward uninsured care via emergency rooms and clinics), business contributions and individual enrollment fees, which will be income-adjusted.
Businesses with more than 20 employees are required by law to pay for health coverage for employees. This has hit the restaurant industry hard, and the fallout is reported in a recent article in an AHIP newsletter:
Phan pays as much as half the cost of health insurance for about 100 full-time employees. Another 100 part-timers get no coverage. He estimates that his healthcare costs will jump by 67% to $500,000 this year with the new program.
Such “a constant assault” makes “every chef I talk to not want to open another restaurant in San Francisco,” he said.
And owners of smaller places, with fewer than 20 employees and exempt from the healthcare requirement, say that it’s become too costly to expand in the city, even when business is booming.
“We will always have 18 [employees] now,” vowed Anna Weinberg, a co-owner of South, a 50-seat restaurant featuring Australian cuisine that opened in October. Weinberg plans to open her next eatery on the Westside of Los Angeles.
In order to comply with the new ordinance (which is being appealed and may even go to the Supreme Court), employers may do any of the following:
There are essentially five ways to satisfy the health care expenditure requirement of the ordinance: (1) make a contribution on behalf of the employee to a health savings account; (2) reimburse an employee directly for his or her out-of-pocket expenses; (3) purchase health care coverage for an employee through a third party; (4) directly provide health coverage to an employee by means of a self-insured program; or (5) make a payment to the City of San Francisco, which will then, in turn, use the payments to fund a program for all uninsured City residents.
While I sympathize with the concept of having healthcare for all, I wonder if San Francisco’s approach will backfire? When businesses can no longer afford to employ workers, unemployment skyrockets, industries leave town, and those who are left will have to pay even more to shoulder the burden. San Francisco is one of the wealthiest cities in the United States, and may survive longer than other cities with these new laws, but in the end I think we might see a mass exodus and the beginning of a local economic depression.
Are the restaurant owners a collective “canary in a coal mine,” or do you think the San Francisco healthcare solution is the lesser of the evils? Will the nation learn something important from this bold initiative?This post originally appeared on Dr. Val’s blog at RevolutionHealth.com.