Still working on closing the health care loophole in San Francisco…

A week ago, on Tuesday November 15th, the San Francisco Board of Supervisors voted 6-5 on Supervisor David Chiu’s legislation related to SF’s landmark Healthcare Security Ordinance (HCSO).

Supervisor David Campos and the coalition of labor groups, workers, healthcare advocates, and businesses (including Health Access) began the discussion around closing a troublesome HCSO loophole earlier this year. Yet these same groups came together to express their opposition to Supervisor Chiu’s legislation, which ultimately passed.

The coalition opposed Chiu’s legislation because it does not resolve the Healthcare Security loophole. The loophole currently allows employers to avoid providing health coverage or paying into the Healthy San Francisco program but putting money into a worker’s Health Reimbursement Account, but then the employer can recapture those dollars if not used by a certain, arbitrary date. Chiu’s legislation would allow this to continue, and also places the landmark Healthy San Francisco program at risk of legal action.

Earlier this month Mayor Ed Lee vetoed the original ordinance authored by Supervisor Campos that would have allowed workers’ Healthcare Reimbursement Accounts to rollover from year to year, which would have successfully closed the loophole, thereby reinforcing the culture of coverage that the original authors intended to create.

Following the veto, Supervisor Cohen made amendments to a competing version of the law authored by Supervisor Chiu. The Chiu/Cohen legislation allows employers to take back unused health care funds after 2 years instead of at the completion of the calendar year as they are doing today.

The central issue with the Chiu/Cohen legislation is that it provides an incentive for employees to continue setting up Health Reimbursement Accounts as a way to meet the requirements of the law, rather than full coverage. By then setting restrictions on the use of those funds, they can basically ensure that they recover many of those dollars after two years (e.g. employers will continue to ban workers from using HRA funds for vision, dental and/or other standard healthcare benefits).

In addition, the problems with the loophole will persist despite the Chiu/Cohen legislation. This includes:
· The city will continue to provide an incentive to employers to use Health Reimbursement Accounts (HRAs) over health insurance or the Healthy San Francisco program.
· Responsible businesses that provide health insurance or use the Healthy San Francisco program will continue to unfairly compete with employers that exploit the loophole.
· Taxpayers will continue to unfairly foot the bill for uninsured workers who have insufficient funds in their accounts to cover their care.
· Consumers will continue to be tricked, being told on a restaurant bill they are paying another dollar for health care for workers, when actually employers continue to ultimately pocket these surcharge fees.

Despite the passage of the Chiu/Cohen amendments, the coalition of labor groups, workers, healthcare advocates, and businesses that began the discussion around this issue will continue to advocate for a meaningful resolution to the healthcare loophole.

This update was written up by Health Access Community Organizer Rose Auguste; for more information, contact her at

Health Access California promotes quality, affordable health care for all Californians.
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