End the health-care scam

Businesses charge a health-care surcharge then keep the money for profit.


OPINION Last year, after receiving data from San Francisco, the Wall Street Journal reported on an investigation into the use of health reimbursement accounts by several local restaurants. It showed a group of employers evading the city's health care law while charging their customers a "Healthy San Francisco" surcharge that is never actually spent on employees' health care.

Rather than providing health coverage to their workers, as customers are led to believe, the restaurants are allocating funds for HRAs — and taking back the funds before they can be used.

The numbers speak for themselves: Of the $62 million that was set aside for health care accounts in 2010, more than $50 million was kept by employers.


Workers spoke about never being notified about the accounts; being forced to jump through numerous, often onerous hoops to receive reimbursements or never receiving reimbursements; facing severe restrictions on use of the funds; and fearing retaliation for seeking to access the funds. It was clear that as long as employers can take back unspent funds they have a large incentive to restrict workers' access.

In response, Supervisor Campos drafted an amendment to the Health Care Security Ordinance (known as Healthy San Francisco) that would have closed this loophole, which was being exploited by a small number of employers. The Chamber of Commerce, accompanied by the San Francisco Chronicle, made hysterical claims about impending job loss and business closures, and after the Board of Supervisors approved the legislation on a 6-5 vote, Mayor Ed Lee vetoed it.

Supervisors Malia Cohen and David Chiu then authored "compromise" legislation that actually didn't address the problem. Their version merely allowed employers to take back workers' health care dollars after two years instead of one. This cosmetic change did, however, provide enough window dressing to please the Chamber, so the supervisors approved it and Mayor Lee signed it into law.

Now, just a few months later, an article in the Public Press showed exactly why we opposed the Cohen/Chiu amendment in the first place: It doesn't really close the loophole. Employers can still take money back from the HRAs. This creates a clear incentive to choose HRAs over insurance — the worst option for workers. Furthermore, the loophole leaves responsible businesses that provide health coverage to employees through insurance or HSF competing against employers that exploit it by paying less into HRAs.

We find it unconscionable that there are businesses charging customers a health-care surcharge and then keeping the money for profit. What is more unconscionable is that City Hall passed an amendment that continues to let it happen.

The Department of Labor Standards Enforcement compliance data for 2011 will be available next month — and if that continues to show abuse of the HRA provision, then it's time for the Board of Supervisors to end the charade and truly close the loophole once and for all. Healthy San Francisco is about providing health care for workers — not creating additional profit for businesses.

Assemblymember Tom Ammiano represents the 13th District. Supervisor David Campos represents District 9.


the original authors of the legislation did not draft it better. Especially since they were some of the most experienced legislators in the City at the time.

Posted by Guest on Apr. 04, 2012 @ 7:55 am

Self employed people (many of who are self employed against their will) pay for health coverage in amounts that rival a rent or mortgage. And with a $3,000 deductable. Things aren't that great for anyone.

I'm not sure why restaurant workers should expect to have a system that works perfectly when the rest of us sure don't. I want them to get whatever medical care they need but if it is an HRA instead of insurance, well, welcome to the club and get used to it. Sorry, but your restaurant job doesn't come with a health plan that is better than what people in offices or self employed get.

Posted by Guest on Apr. 04, 2012 @ 10:02 am

Such pessimism and defeatism is a hallmark of the loser left. I'd expect for Real Americans like anonymous Guest to embrace the spirit of innovation and creative problem solving instead of moping and wallowing in powerlessness and not striving to make access to health care better. This is why America is failing, because everyone's lost the will to fight to make things better.

Posted by marcos on Apr. 04, 2012 @ 10:36 am

Some of us don't consider ourselves losers but we don't think that piecemeal solutions for select groups are the way to go.

Some of us don't content ourselves with feel-good, do-nothing programs just so that we can tell ourselves how superior we feel because we do things on behalf of the little people out there.

Posted by Guest on Apr. 04, 2012 @ 1:17 pm

Or was it just a wee whine?

Posted by Guest on Apr. 04, 2012 @ 1:50 pm

What problem has the legislation solved?

People are paying more to eat at restaurants and the people who work there still don't get health care.

He makes a good point - why are restaurant workers being singled out when there are plenty of other workers who don't have health care like, say housekeepers and people who clean homes who make less.

This was poorly drafted legislation that has done more harm than good and is nothing short of a complete failure.

So the author comes in here and whines about it...

Posted by Guest on Apr. 04, 2012 @ 10:56 pm

There's no situation that local useful idiots like the authors can't make worse.

Posted by Chromefields on Apr. 04, 2012 @ 10:09 am

Please skip the chocolate this year and put a 'public option' and a universal insurance mandate in my Easter basket. I am so tired of this barbaric system. 20 years old cost 200. a month, 45-59 year olds 700. and the family with a 50. copay and a 2000. deductible - 1100.+ That is too much money. See you Sunday

Posted by Guest on Apr. 04, 2012 @ 2:27 pm


You might. But it would be rewarding those who smoke, drink and ignore their health, while punishing those who look after themselves.

Can you spell "moral hazard"?

Posted by Guest on Apr. 04, 2012 @ 3:00 pm

Are you kidding me, in this country? what a laugh, moral - cant belive the word is even in use anymore- the worlds greatest kleptocracy - lil ole usa

Posted by Guest on Apr. 04, 2012 @ 3:06 pm

means. It's what happens if you decide to give everyone unlimited free healthcare. People stop looking after their health, figuring that "somebody else" will pay for their "free" care.

In every nation with a "free" socialized healthcare system, there are lines and queues, because demand becomes infinite while supply is constrained by cost.

Why do you think Canada now pays US hospitals to care for Canadian citizens who cannot be cared for under the Canadian system?

That's only "free" if you don't care how much you pay in taxes, and you don't care how large your deficit is, and how much debt is incurred.

Posted by Guest on Apr. 04, 2012 @ 3:24 pm

It's unclear from the chart which of these restaurants have gamed the system. Are you saying that those with a "-" under "no expenditures" have collected from customers for the tax, but have not spent ANY money to their employees for health coverage? If you're going to have a chart, please make it absolutely clear which restaurants are gaming the system.

Posted by Guest on Apr. 04, 2012 @ 4:02 pm

We've added an introduction to the chart that might clear things up a bit. You can find it now at:


Posted by marke on Apr. 04, 2012 @ 4:32 pm

a non smoker, very moderate drinker, no chronic problems, from paying sky high rates simply because I am over 50- I am already supporting the people who care nothing for their health and get great free university based care because this country doesnt let them die in the streets- moral hazard I understand and we are way past it re: healthcare

Posted by Guest on Apr. 04, 2012 @ 5:12 pm

The city should be commended for attempting to provide health care to its' citizens!

Whats needed is single payer health care for all Americans!!!

eliminate the middle man, the corporate health insurers, and their corporate death panels!!

Posted by SF T Party on Apr. 18, 2012 @ 3:05 pm