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San Francisco Health Care Security Ordinance: A Local Public Option

Wednesday, December 2, 2009

by Jake Grumbach 

Specifically addressing the failure of the state and federal governments to increase access to and the affordability of health care, San Francisco Supervisor Tom Ammiano partnered with a number of the policymakers of the 2003-2004 SB2 state proposal to devise a plan to cover the approximately 82,000 uninsured residents of the City of San Francisco.

.The HCSO contains two policies. First, Supervisor Ammiano created its funding component that requires all firms to “pay or play,” that is, either to pay a penalty to the City or provide health insurance for their employees. Second, the Ammiano policy merged with Mayor Gavin Newsom’s idea of a new City-run health access plan from the recommendations of the Universal Health Care Council, which he appointed. The Council included over forty members from various community, insurance, health provider, labor, and business organizations, and its proposed health plan came to be called Healthy San Francisco (now the layman’s term for the entire HCSO). Healthy San Francisco works the same as health insurance inside City limits, but the SF Department of Public Health Director, Mitchell Katz, developed the idea to keep costs down by only developing partnerships with a network of San Francisco hospitals and clinics rather than providing complete insurance, and limiting eligibility to those up to 500% of the Federal Poverty Level who have been uninsured for three months.

Since its first 29 enrollees in Chinatown in July of 2007, Healthy San Francisco has been remarkably popular among local politicians, the local media, and residents of San Francisco. The Mayor and Board of Supervisors, which voted unanimously in favor of the HCSO, have a stake in the program’s popularity for their own political futures; Gavin Newsom utilized Healthy San Francisco as a main policy example in his (now defunct) gubernatorial campaign. However, the Supervisors are also responsive to their constituents, including labor, community, and religious groups that have vigorously supported the policy.Additionally, the two most popular newspapers in San Francisco, the Chronicle and Examiner, as well as popular independent news sources have written of Healthy San Francisco with praise since before its implementationThe one group that has taken the risk of unabashedly opposing the policy has been the Golden Gate Restaurant Association (GGRA), a restaurant owners group that claims that the industry’s prevalence of part-time workers and small profit margins makes the employer spending requirement ($1.06 per worker hour for firms with 20 to 99 workers) quite punitive

The HCSO is still in the midst of a lawsuit from the GGRA, which argues that the employer spending requirement of the Ordinance violates the federal ERISA Act of 1974 that regulates employee benefits like health care. A number of labor unions, including SEIU, the SF Labor Council, Local 1021, SEIU United Health Care Workers-West, and United-Here! Local 2 intervened on behalf of the City to defend the HCSO. Interestingly, the policy actually benefits part-time and non-union workers much more than unionized workers, who are more likely to already have employer-provided health insurance.

Health care reform on the federal level trumps local policy, largely due to the higher bargaining and cost-cutting ability of the federal government; the successful implementation of a national public option could change the functions of the HCSO and significantly reduce the number of uninsured, rendering an HCSO policy unnecessary. However, if a public option is included in the final federal bill, it will likely not be “robust,” meaning it will only be eligible to a small percentage of the American public and will probably negotiate reimbursement rates based on market levels, not Medicare rates. The same is true of the proposed employer mandate, which will likely exempt more businesses and mandate smaller penalties than the HCSO. It is quite possible that success in San Francisco and diffusion elsewhere could influence the specifics of the potential federal employer mandate and public option.

By August of 2009, Healthy San Francisco had enrolled more than 45,000 of the previously 82,000 uninsured San Franciscans, contained costs more effectively than the Massachusetts program, and received high ratings of satisfaction. This is a policy has evaded many of the usual obstacles to progressive social policies and changed the lives of tens of thousands of Americans. Policymakers would be wise to keep this legislation in mind as federal health reform continues on its precarious path.

 "Master Report: San Francisco Health Care Security Ordinance." City and County of San Francisco, 2006,

 "Status Report on the Implementation of the San Francisco Health Care Security Ordinance." San Francisco: Department of Public Health, Office of Labor Standards Enforcement, and City Controller's Office, 2009.

 Smith, Steve. San Francisco’s Public Option a Model for America’s Health Care Reform AFL-CIO, 2009 

 Guy, Roma. Creating an Employer Based Health Care System for San Francisco California Women's Agenda, 

 "Healthy San Francisco: A Case Study of City-Level Health Reform." 



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