Lee seeks to lessen political damage from his promised veto


Mayor Ed Lee says he will veto legislation that the Board of Supervisors approved yesterday that would have banned San Francisco businesses from keeping money they're required to set aside for employee health care costs. But he seems to be worried about how that move will be seen by voters, touting his support for a “consensus strategy” that doesn't yet exist and might not be possible given the fundamentally different way both sides see the issue.

The legislation by Sup. David Campos addresses the $50 million per year that businesses have been taking from their employees' health savings accounts, which they set up to comply with city law requiring them to cover employee health care costs and which many restaurants subsidize by placing a 3-5 percent surcharge on their customers' bills.

The San Francisco Chamber of Commerce and opponents of the Campos legislation defend the practice and cast efforts to reserve that money for employee health care as a job-killing loss to the business community, although some have finally come around to calling the practice a “loophole” that should be addressed with minor reforms. Yet labor groups and consumer advocates say businesses have no valid claim to that money, making it difficult to see where this elusive common ground might lie.

Supporters of the legislation – including mayoral candidates Leland Yee, Dennis Herrera, John Avalos, and Phil Ting, as well as Assemblymember Tom Ammiano, who authored the Health Care Security Ordinance as a supervisor – rallied on the steps of the City Hall today, calling for Lee to sign the legislation.

Shortly thereafter, the Mayor's Office issued a press release with the headline “Mayor Lee Convenes Group to Improve Health Care Access & Protect Job,” announcing a “consensus building effort” that includes business groups and Campos and other supporters of the measure. Campos tells the Guardian that he did get a call from the Mayor's Office today and he agreed to take part in the effort – just as he did in fruitless negotiations with Chamber officials – but he still has a fundamental disagreement with Lee and other Chamber allies over the issue.

“I talked to the Mayor's Office about their proposal and I have indicated my concerns,” Campos said. He noted that both Lee's proposal and another alternative by Board President David Chiu – who was quoted in Lee's press release saying “I am committed to continuing the collaborative effort to ensure health care access to workers while protecting jobs.” – let businesses profit from money that's supposed to be dedicated to employee health care

“So far, none of the proposals except for mine ensure that whatever consumers pay goes to health care,” Campos said, expressing confidence that public opinion is on his side. “It's one of those issues that the more everyday San Franciscans hear what's happening, the more outraged they are.”

But while Lee and Chiu each use the language of seeking compromise and trying to “close the loophole,” both rely on the basic Chamber paradigm that this money belongs to the businesses and setting it aside for employee health care as city law calls for would hurt “jobs.”

When Lee was asked about the issue by a group of reporters today, he said: “Next week, we're forging a labor and management entities' meeting with the Mayor's Office and supervisors to try to forge changes to the Campos legislation. I cannot sign it the way it is now, because of two reasons. One, it does not focus on the healthcare needs of the employees; and two, it will force the employers to just keep millions of dollars lying around without any use and that will decrease the efforts to create more jobs. So both objectives have to be reflected in the ordinance, and I want to make the changes appropriate for that.”

The first reason seems to ignore the fact that the city is barred by federal ERISA law from telling businesses how to provide health coverage, which is why so many of them opted to create these health savings accounts – which are almost useless for people facing serious medical costs – rather than providing health insurance or paying into the city's Healthy San Francisco program. And supporters of the legislation simply reject the validity of Lee's second reason.

“That position is based on a false premise. This money belongs to the workers and it's something that consumers are paying for,” Campos said. “We have a fundamental disagreement.”