Lee benefits from vetoing health care reform

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Amendments would make it tough for restaurants to charge customers for employee health care that they aren't providing.

Downtown groups that pressured Mayor Ed Lee to veto legislation that would have prevented businesses from raiding their employees' health savings accounts have been funneling big bucks into independent expenditure campaigns formed to keep Lee in the Mayor's Office.

Meanwhile, the Board of Supervisors today strengthened a weak alternative to the vetoed legislation by Board President David Chiu, which it then continued for two weeks. The amendments by Sup. Malia Cohen were unanimously approved by the board, but her five allies in supporting the vetoed legislation – David Campos, John Avalos, Ross Mirkarimi, Jane Kim, and Eric Mar – preferred that the measure be returned to committee for more analysis, losing on a 6-5 vote.

“We need more time to understand the implications of the amendments. We're not sure if it actually closes the loophole,” Campos, the vetoed measure's sponsor, said of provisions in the Health Care Security Ordinance – the city's landmark measure that required employers to provide some health coverage to employees – that allowed businesses last year to pocket more than $50 million from health savings accounts they created for their employees.

One Cohen amendment specifically addressed one of the more egregious violations – restaurants that charge customers at 3-5 percent surcharge for employee health care and than pocket that money at the end of the year – which Chiu had addressed only by calling for more scrutiny of the tactic by the Office of Labor Standards. She also would require businesses to keep two years worth of contributions in the account, rather than the one year sought by Chiu to address the so-called “January problem” of businesses draining the account at the end of every year and leaving nothing for employees who get sick or injured at the start of the year.

It was perhaps a sign of the heat that Lee took from labor and consumer groups for his veto that he quickly issued a press release today praising the supervisors for addressing the issue. “I applaud President Chiu, Supervisor Cohen, organized labor, small business owners, and the Department of Public Health for finding the solutions to this important public policy that can strengthen our City’s landmark Health Care Security Ordinance. By closing the loophole through these proposed amendments, we can increase access to health care, protect jobs in our small businesses and protect consumers while growing our economy at the same time,” it read.

But Lee appears to have already benefited from heeding the demands of downtown – particularly the San Francisco Chamber of Commerce and Golden Gate Restaurant Association (GGRA) – who made defeating the Campos legislation a top priority, casting it as a new “fee” that would drain $50 million from the local economy.

The San Francisco Alliance for Jobs and Sustainable Growth PAC, created by notorious downtown bagman Jim Sutton, is the best-funded on the four independent expenditure groups that are supporting Lee, taking in $390,000 this fall, including $27,000 from the GGRA and $25,000 from the Chamber's SF Forward group. Both groups also support the Committee on Jobs, which kicked in $110,000 to the Alliance campaign. GGRA also gave another $10,000 to the pension reform campaign that Lee is pushing, support the Chamber had threatened to withhold if the Campos measure was approved.

GGRA Executive Director Rob Black denied this was pay-to-play politics, noting that the Alliance is also supporting DA George Gascon, Sheriff candidate Chris Cunnie and two ballot measures. “But absolutely, the mayor's name is on there and the organization voted to endorse him,” Black said.

GGRA voted in August to endorse Lee, Chiu, and Michela Alioto-Pier for mayor. Black said the organization is “generally supportive of Sup. Chiu's approach to reforming the Health Care Security Ordinance,” and Black specifically said it supports improving requirements that businesses notify employees about the health savings accounts and how to use them.

The GGRA led the original fight against the HCSO in 2006, which was sponsored by then-Sup. Tom Ammiano, who lined up a veto-proof majority on the progressive-dominated board and eventually persuaded then-Mayor Gavin Newsom to support it. The measure created the Healthy San Francisco program and required employers to spend a minimum amount per employee on health care, although federal ERISA law bars cities from prescribing how that money is spent.

GGRA challenged the employer mandate all the way to the U.S. Supreme Court on the grounds that it violated ERISA, losing the case. Many of its members restaurants then opted to use health savings accounts rather than paying into Healthy San Francisco or private health insurance, even though health experts say such accounts are the worst option.

Campos and his allies have maintained that money in these health savings accounts belongs to employees and that businesses that use and raid them gain an unfair competitive advantage at the expense of their employees, customers, and city taxpayers, who are often forced to foot the bill for the uninsured.

Campos and the coalition that supports him has said they may take this issue to voters if the Chiu/Lee legislative fix doesn't address their concerns.

Comments

seeks to achieve a sense of balance between supporting business and protecting workers' rights. A one-sided solution isn't in anyone's interests, and voters have repeatedly said that jobs are the #1 issue.

Posted by Anonymous on Nov. 01, 2011 @ 4:47 pm

Chronicle Columnist Andy Ross hanging out and eating risotto with George Gascon the week before the election: wtf?

https://www.facebook.com/photo.php?fbid=255742264473822&set=a.2557415278...

Posted by Guest on Nov. 01, 2011 @ 6:03 pm

It's unconscionable that you should get stuck with an extra fee tacked onto every meal which is then used by that business to pad its bottom line - absolutely unconscionable.

Posted by guest on Nov. 01, 2011 @ 6:16 pm

Why is it that so many people need the government to do what they can not do for themselves, in this case it's quite easy for you to spend your money as you deem fit.

Posted by Guest on Nov. 02, 2011 @ 8:47 am

I've started tipping 10% rather than 15%, since they now get the balance in free healthcare on my dime.

Posted by Guest on Nov. 02, 2011 @ 9:01 am

Me too. I considered it a part of their tip when I used to patronize the restaurants that had surcharges.

Posted by sfsoma on Nov. 02, 2011 @ 9:45 am

So the restaurants are charging a surcharge, most of which they are simply keeping at the end of the year and refusing to provide health coverage for their employees, and your response is to reduce how much you are tipping your server? That makes no sense at all.

Posted by steven on Nov. 04, 2011 @ 9:47 am

not being used for the benefit of the employees?

The assumption of a customer has to be that it is mostly being used for the employees and therefore it might be logical to scale back tips to help pay for that.

If the rules for the scheme need to be tightened up, then there is a process for doing that. But in the meantime, consumers are entitled to try and manage their costs - many of us don't like this surcharge at all, and do this as a form of protest.

Posted by Anonymous on Nov. 04, 2011 @ 9:57 am

Am I supposed to drive outside SF city limits to eat because I think businesses should stop stealing the money they charge their customers - ostensibly to pay healthcare?

Posted by guest on Nov. 02, 2011 @ 9:15 am

Instead of 15% tip and they have to buy their own health insurance, tip them 11% since they now get that health insurance for free.

Posted by Guest on Nov. 02, 2011 @ 9:58 am

They aren't getting health insurance for free, that's the point of the vetoed legislation. Go back and read what the Guardian, the Wall Street Journal, and other papers have written about this. The restaurant owners are charging you extra money, making it seem as if the city requires the surcharge in many cases, telling you that it's for employee health care, setting up difficult to access health savings accounts, and then keeping whatever is left in those accounts at the end of the year, to the tune of more than $50 million last year according to a city audit. They're defying city law that requires them to provide health coverage for their employees, they're committing consumer fraud on you, and now they're even causing you to tip less to the employees they're screwing over. Yes, we can and should stop frequenting these restaurants, but this kind of situation is exactly why we have governments, to regulate consumer fraud and protect workers' rights.

Posted by steven on Nov. 04, 2011 @ 9:55 am

There are plenty of places that do not charge it.

Where are you eating?

Maybe you should try eating less upscale mr 1%.

Posted by guest on Nov. 03, 2011 @ 8:33 am

Many restaurants collecting the surcharge are making tens of thousands of dollars off of this scam; a few are making over a 100 thousand. It's absurd that Rob Black would deny pay to play. Throwing big bucks into a political campaign at the same time that you're lobbying for favors is the definition of pay to play. If this is the level of corruption that Ed Lee is involved in during the campaign can you imagine the wheeling and dealing if he gets elected. He is going to be a bigger sell-out than Willie Brown. Another loop hole we need to address is in our finance laws. The intent is these supposed to prevent these kinds plays from happening, but when money is circulated from one IE to another the spirit and intent of our campaign laws are broken.

Posted by John on Nov. 02, 2011 @ 5:45 am

Many restaurants collecting the surcharge are making tens of thousands of dollars off of this scam; a few are making over a 100 thousand. It's absurd that Rob Black would deny pay to play. Throwing big bucks into a political campaign at the same time that you're lobbying for favors is the definition of pay to play. If this is the level of corruption that Ed Lee is involved in during the campaign can you imagine the wheeling and dealing if he gets elected. He is going to be a bigger sell-out than Willie Brown. Another loop hole we need to address is in our finance laws. The intent is these supposed to prevent these kinds plays from happening, but when money is circulated from one IE to another the spirit and intent of our campaign laws are broken.

Posted by John on Nov. 02, 2011 @ 5:47 am

That your side does the same thing at every turn, your chosen set of special interests are just as conniving and scheming?

How old are you and you still have this college communist view of the world?

Campos, Avalos and all are just as owned.

Posted by Guest on Nov. 02, 2011 @ 8:50 am

That's simply untrue. Campos and Avalos haven't taken millions of dollars from corporate interests that have a clear self-interest in making that investment, which they seek to disguise through various front groups. I'm old enough not to trust capital to do right by people, which sounds like a lesson you still haven't learned, Guest. One needn't be a communist to understand that crony capitalism and casino capitalism have run amuck and do real and lasting damage to this country and 99 percent of its people.

Posted by steven on Nov. 04, 2011 @ 10:04 am

Ed Lee is the Corporate/Big Business/1% candidate. Please, fellow San Francisco citizens think twice before marking him for any of your three choices.

Posted by sfsoma on Nov. 02, 2011 @ 9:47 am

This is what you can expect... money in the hands of Lees backers!

Posted by Guest on Nov. 02, 2011 @ 3:25 pm

This is a perfect example of why San Franciscans should NOT vote for Ed Lee as the mayor of SF. We need a mayor who will CLOSE the loophole and protect our city's small businesses, as Leland Yee have been and will continue to do.

Posted by Chrissy on Nov. 02, 2011 @ 3:37 pm

than any other candidate. Avalos doesn't even have a policy on private-sector jobs - I suspect he thinks they are "bad".

Yee is probably the skeeviest candidate running, and that's saying something

Chui/Dufty/Lee if you want a vibrant local economy.

Posted by Lisa on Nov. 02, 2011 @ 3:55 pm

Actually, Avalos authored the local hire ordinance that is all about private sector jobs. His municipal bank proposal is about making capital available for small businesses. Chiu and Lee have a classic neoliberal approach to economic development, offering businesses tax breaks and government assistance in the hopes that good jobs trickle down to the people, an approach that usually results in higher corporate profits and cities competing against one another in race to the bottom.

Posted by steven on Nov. 04, 2011 @ 10:13 am

The City can't tell Wells Fargo to hire a minimum percent of it's employees from City residents. Doesn't only apply to city hiring? And the city is probably firing more than hiring these days.

Anyway, local hire doesn't really create jobs, it just moves them around. If every Bay Area city does this then the net gain is zero - it's a beggar-they-neighbor policy not a real creator of wealth and jobs, which is what voters say they want to see.

Posted by Anonymous on Nov. 04, 2011 @ 11:40 am

This is a perfect example why San Franciscans should NOT vote for Ed Lee as the mayor of SF. We need to CLOSE the loophole, and support our city's small businesses, as Leland Yee have been and will continue to do.

Posted by Chrissy on Nov. 02, 2011 @ 3:40 pm

Ed Lee supports the interest of his backers -- if you vote for Lee you vote for what the big businesses want.

Posted by Brittany on Nov. 02, 2011 @ 4:12 pm

SF people support Chiu~

Posted by We want Chiu! We need Chiu! on Nov. 08, 2011 @ 3:13 am