October 8, 2008
This week I was contacted by a gentleman whose health insurance costs are eating up nearly a quarter of his take home income. He writes, “I believe I will have to drop my $468 premium per month health insurance starting in November.”
While problems in the financial market and the presidential campaign take center stage in the press, the problems in the lives of real people continue to focus on health care – especially rising costs.
Concerns make their way to my office in many forms: work injuries not covered by employers, businesses looking at double digit inflation in premiums every year, employees with dependents not covered, people without insurance delaying care who later discover serious illness.
Last week a court decision in California provided hope for progress to those of us working towards health care reform across our county.
The story began in two summers ago when the City of San Francisco passed its own version of health care reform – the Health Care Security ordinance. Businesses in the city were asked to pay a certain amount toward their employees’ health benefits or pay the city. For-profit businesses with 100 employees or more were to pay at least $1.76 an hour towards their employees’ plan or pay the same amount to the city. Non-profit organizations and small businesses paid $1.17 an hour. Businesses with fewer than 20 employees were exempt from making any payments.
When businesses paid into the fund, the city provided medical care to the employees through a “Health Access Program.” The city did not require employers to establish their own plan or make changes to any existing plans.
Last December a lower court found the city did not have the authority to ask employers to spend on health care. This past week, on appeal, the higher court reversed the lower court’s decision and found the city’s Health Care Security ordinance did not violate federal laws regulating employee benefit programs.
The California court decision affects Wisconsin because the federal law in question provided a significant legal barrier to any state seeking to reform health care.
The law – the Employer Retirement and Security Act of 1974 or ERISA – was the result of a delicate balance between labor and management designed to protect employee benefits. But one part of the law protects businesses from having to provide employees a certain type of health plan.
Many states, including Wisconsin, have been working hard to find innovative solutions to cover more people with affordable health insurance. Several states have used an approach known as “pay or play” where employers either “play” by spending money on employee health insurance or “pay” by paying into a fund. The fund money is used to pay for insurance through some type of a public plan.
“Pay or Play” ran into legal problems because of the federal ERISA law. Last week’s court decision found “the employer spending requirements do not establish an ERISA plan.” This decision provides promise for innovative ideas at the state level.
San Francisco’s Mayor, Gavin Newsom, summed it up this way (as reported in the Los Angeles Times), “Today’s ruling is a huge victory for the city and for the 46 million Americans who don’t have insurance. San Francisco is proving that it can be done. By thinking outside the box, every city and state in this country can provide health insurance if they are willing to challenge the conventional wisdom.”
We need to continue “thinking outside the box” and move health care reform forward for the many people who contact me needing answers.