Despite ruling, San Francisco to expand health services

San Francisco will move ahead Wednesday with plans to expand health services for uninsured residents while appealing a federal court ruling that, if upheld, could thwart its trailblazing effort to achieve universal coverage.

U.S. District Judge Jeffrey S. White last week struck down a provision of the plan scheduled to go into effect Wednesday that would have required employers with 20 or more employees to offer health coverage or pay a fee to support the city program. Without the mandate, city officials project that about one-third of the city’s estimated 73,000 uninsured adults will be left without health benefits.

But the ruling doesn’t put Healthy San Francisco out of business, said Tangerine Brigham, director of the city’s health benefits program. Funded by city taxes, a federal grant, quarterly membership fees and co-payments, the novel program will be available to the remaining two-thirds -- uninsured adults who earn up to 300% of the federal poverty level, or about $30,000 for an individual.

“We’re certainly disappointed with the ruling, because ultimately we wanted to go beyond 300%,” Brigham said. “We are appealing, and we believe that we’ll be successful on appeal.”

White’s ruling praised the “laudable” goal of providing healthcare to all residents but upheld a challenge brought by the Golden Gate Restaurant Assn. that the mandate would violate a federal law requiring consistency in the health coverage afforded employees who work for the same company but live in different jurisdictions.

Since the ruling, state officials have scrambled to determine whether the statewide health plan forged by Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Nuñez and pending before the Legislature could be vulnerable to the same kind of challenge. It too contains an employer mandate.

“We are looking at the ruling very closely to see what impact it has on the state’s proposal,” said Frank Furtek, chief counsel for the California Health and Human Services Agency. “On first blush, we do believe that the district court was overly broad in its ruling.” Furtek said the state supports San Francisco’s appeal and is considering filing a third-party amicus brief.

Jot Condie, president and chief executive of the California Restaurant Assn., an umbrella group that includes the Golden Gate Restaurant Assn., said the state plan appears to have “substantial similarities” to the San Francisco employer mandate. The restaurant group argues that such a mandate would adversely affect small businesses operating on slim profit margins.

“If it ends up being a proposal that will produce a severe hardship for our industry, we’re going to look at all our options, which includes a possible legal challenge,” Condie said.

That makes San Francisco’s appeal all the more significant, City Atty. Dennis Herrera said.

“The district court ruling is extremely broad,” he said. “If it’s upheld, it could preclude any efforts to require employers to pay money for healthcare coverage. It could jeopardize efforts that are going on at the state level and in other jurisdictions at well.”

Herrera last week asked the 9th U.S. Circuit Court of Appeals in San Francisco for an emergency stay to allow the mandate to take effect Wednesday as scheduled.

The Healthy San Francisco program is the first attempt by a city or county to address the vexing national problem of providing affordable healthcare to the uninsured.

Conceived by Mayor Gavin Newsom and launched in July at two pilot clinics, the plan aims to enroll all residents without health insurance, regardless of their income, immigration status or existing medical conditions.

To enroll, residents who can afford to contribute pay quarterly membership fees and co-payments on a sliding scale. Care is provided by city health clinics, affiliated community clinics and the city’s public hospital. Unlike health insurance, which is portable, residents are covered only at participating facilities within the city.

mary.engel@latimes.com