Ammiano’s Health Care Proposal: Bad for Business

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Originally appeared at January 25 2006

San Francisco officials often decry the city’s shrinking business community. ?Yet there’s little acknowledgment that the very policies local government tends to push have the effect of undermining business.

The latest anti-business proposal to hit the table was put forward by Supervisor Tom Ammiano last November. The proposed ordinance would affect non-union businesses and nonprofit organizations that have at least 20 employees and don’t provide medical insurance.

Businesses would have to put approximately $345 a month per employee into a fund to be used for health care costs. Employees need work only 80 hours a month. The $345 is based on the average monthly total paid by 10 Bay Area county governments to cover each of their workers. The ordinance also includes the formation of a seven-member health security task force, which would report back to the Board of Supervisors.

Ammiano’s proposal is endorsed by fellow supervisors Sophie Maxwell, Chris Daly and Ross Mirkarimi. Other supporters include the San Francisco Peoples’ Organization, Senior Action Network, the San Francisco Labor Council, Young Workers United, ACORN, Gray Panthers, Health Care for All, the Tenderloin Housing Clinic, SEIU Local 790, UFCW Local 21 and Health Access California.

On the other hand, San Francisco’s business community is none too thrilled about Ammiano’s proposal. ?The Chamber of Commerce has pulled together a diverse coalition, including large and small business leaders, members of theater and dance nonprofit organizations, restaurateurs and health insurance experts, to oppose the legislation. Such critics fear that Ammiano’s plan would be a disaster for the city’s economy, should it become law.

Giving Away the Store

One of Ammiano’s reasons for putting forth his proposal is to try to save the city the $20 million it spends on uninsured patients at San Francisco General Hospital each year.

While lack of medical coverage is certainly a valid issue, San Francisco is home to an inordinate amount of free health clinics for the poor, and according to a 2005 city controller report, only 13 percent of the population is without health insurance. As it stands, San Francisco spends more on public health than any other city in the country. The nationwide average is $64 per person, per month and San Francisco spends $400.

It might behoove the city to do some studies regarding the nature of the uninsured before offering solutions. ?Nationwide studies have shown that a majority of the uninsured consists of young adults who, for a variety of reasons, voluntarily decline coverage. The fact that most youth are hardly at death’s door and that many college campuses provide free or low-cost health care may have something to do with it.

In California, a significant sector of the uninsured population is comprised of illegal immigrants. ?As a “sanctuary city,” San Francisco not only attracts illegal aliens but also shields them from immigration laws. ?In the meantime, they are able to take advantage of free health care, education and other city-funded programs. ?Rather than address the issue, Ammiano is merely putting the problem on someone else’s doorstep.

What Doesn’t Add Up

Ammiano’s proposal, while well intentioned, is full of holes. ?For instance, how would the proposal affect employers who already provide medical benefits to their workers but pay less than $345 a month because of cost-saving health plans? What about people who have two jobs? Would each employer have to provide the full amount? How about employees who already have insurance through a partner or spouse? Then there are the many employees who are not even residents of San Francisco.

Employers that cannot afford to comply with Ammiano’s proposal may be forced to pack up and take their business elsewhere. Those that remain could turn to loopholes such as freezing hiring at 19 employees and paying workers under the table. Wages could flatten out overall because of the added financial constraints on employers. None of these options is beneficial to employees, let alone employers.

Such concerns are not merely speculative. According to a study put out by the Bay Area Economic Forum, Ammiano’s proposal could cost San Francisco businesses $307 million a year, forcing many of them to leave the city and causing wages to stagnate. In general, the study finds that Ammiano’s plan, along with other health care mandates, “can have major economic consequences” for the city’s business community. It appears that the only business that stands to gain from Ammiano’s proposal is insurance.

Although Ammiano professes to be open to further negotiation and has expressed flexibility on the $345 figure, he has been less than accommodating toward the business community. While claiming to have “left the door open” to business leaders, he excluded them from the drafting process. He did not conduct an economic impact review before drafting the legislation, something that business leaders would certainly have insisted on had they been involved. ? In fact, Ammiano has gone so far as to dismiss all calls for further studies, describing them merely as a “stalling tactic.” When it comes to his own pet projects, it seems that ignorance is bliss.

Meanwhile, the opposition is gearing up for a fight. On Jan. 9, San Francisco’s Small Business Commission voted to oppose Ammiano’s legislation and is instead backing Mayor Gavin Newsom’s proposal to form a panel and look for alternatives. In a letter to the Board of Supervisors, Newsom critiqued Ammiano’s proposal but did not indicate whether he would veto it.

The Board of Supervisors Finance Committee will take up the legislation on Feb. 1.

Backdoor Socialism

If Ammiano is unable to garner the six votes needed from the Board of Supervisors to pass the proposal or Mayor Newsom vetoes it, Ammiano has threatened to put the measure on the ballot. As he put it, “This is inevitable in one form or another.”

Considering San Francisco voters’ overwhelming support last year for state Proposition 72, which would have forced all but small businesses to pay 80 percent of employees’ health care costs, he may have a point. San Franciscans will vote for just about any ballot measure that appeals to their penchant for idealism, however unrealistic in practice.

Indeed, Ammiano cited the passage of Proposition O in 1998, a symbolic statement declaring that San Francisco should move to universal health care, as a popular mandate for the current proposal. In doing so, he shed light on the true nature of his plan and others like it, which is to gradually move toward socialized medicine. But instead of the federal government providing health care, private businesses will be forced by local governments to do the honors.

Socialized medicine may sound good in theory, but if one actually examines the countries in which it is offered, the reality isn’t quite so rosy. Having encountered it in the United Kingdom, I can attest to a less than pleasant experience. Let’s just say there’s a reason that the United States is still one of the main innovators in medical care, advances and technology.

Whatever the long-term intentions, if Ammiano’s proposal becomes law, it could be the nail in the coffin for San Francisco’s beleaguered business community. ? San Francisco is blessed with beautiful geography and a guaranteed tourism trade, but this alone will not keep the city afloat. Like it or not, San Francisco needs a thriving business community to survive.

City officials would do well stop meddling and pay attention to the old adage, “If it ain’t broke, don’t fix it.”


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