Resolution: 10-04

Amending the Minimum Standards and Supporting Other Modifications To the Healthcare Accountability Ordinance

WHEREAS, on May 29, 2001, the Board of Supervisors passed the Healthcare Accountability Ordinance (HCAO), requiring that employers doing business with the City provide health care coverage for their employees or pay a fee to offset health costs for care provided by the City to the uninsured; and,

WHEREAS, the HCAO provides the Health Commission with the authority and responsibility to determine minimum standards for health plan benefits offered by City contractors and lessees; as well as certain subcontractors and subtenants, while other modifications to the Ordinance must be reviewed and approved by the Board of Supervisors; and,

WHEREAS, the Health Commission set the original HCAO minimum standards in 2001 dictating the health plan benefits based upon the Health Maintenance Organization (HMO) model of care because it provides for a comprehensive range of cost-effective services; and,

WHEREAS, the HCAO requires that the Health Commission review the minimum standards every two years and make changes to ensure that the standards are consistent with the current health insurance market; and,

WHEREAS, in November 2003, the Department of Public Health (DPH) reviewed the minimum standards and proposed changes to the Health Commission updating the minimum standards and adjusting the employer fee to reflect current market realities; and,

WHEREAS, at the November meeting public speakers raised a number of objections to the proposed changes and offered alternate proposals to update the Ordinance; and,

WHEREAS, hearing this testimony the Health Commission postponed acting on the proposed changes and instructed staff to form a HCAO stakeholders group to meet and explore solutions that addressed the needs of all the stakeholders, including the original drafters of the Ordinance, non-profit organizations, Labor, Human Services Network, the Health Authority and representatives from the Office of Contract Administration; and,

WHEREAS, DPH convened the HCAO stakeholders group and reviewed current HMO options offered to small businesses, noting that none of the plans meet the minimum standards and only the most expensive plans come close; and,

WHEREAS, the plans fail to meet the minimum standards because higher co-payments are required of employees to access these benefits, not because fewer benefits are being offered by HMOs; and,

WHEREAS, payments have risen dramatically for employers as well, with a 44.4 percent rise in California’s average HMO premiums since 2000; and,

WHEREAS, the minimum standards are meant to reflect market reality and balance the needs of the employer and the employee; and,

WHEREAS, the stakeholders group believes that this balance can be best achieved by modifying the co-payment structure of the current minimum standards without changing the range of benefits offered; and,

WHEREAS, updating the minimum standards to reflect current market reality will enable many more employers to purchase mid-range HMO plans, thereby resulting in more workers in San Francisco being insured, supporting a better qualified and stable workforce on City contracts and leases; and,

WHEREAS, the average HMO monthly premium was $222 per month in 2003 and the employer fee of $1.50 per hour, $60 per week maximum ($240/month), this no longer adequately reflects the reality of rising premium costs and would better reflect this reality at $2.00 per hour, $80 per week maximum ($320/month); and,

WHEREAS, stakeholders identified additional issues and solutions to improve the Ordinance, including: postpone the requirement to provide coverage for part-time workers under 20 hours per week as coverage is not available; revise the language to exclude all types of student interns from HCAO; exempt non-profit relief workers; expand from a 30-day effective date for health insurance to the first day following the first complete calendar month worked by the employee; and support the pass-through for employers’ health insurance costs in the budgets for City contracts; and,

WHEREAS, DPH supports the proposals developed by the HCAO stakeholders group and agrees that it is the appropriate time for a number of additional modifications within the Ordinance; and,

WHEREAS, some of these changes are under the purview of the Health Commission while others are at the discretion of the Board of Supervisors; therefore, be it

RESOLVED, that the minimum standards will require that co-payments for office visits (including PCP, perinatal and maternity, preventive care, and family planning) shall not exceed $15 per visit for a Closed Panel HMO; and $20 per visit for all other HMO models. The employee’s annual out-of-pocket maximum shall not exceed $2,500. Each plan must be comprehensive and provide coverage for the following services:

and, be it

FURTHER RESOLVED, that these new minimum standards will be effective on September 1, 2004; and, be it

FURTHER RESOLVED, that the Health Commission supports the proposed changes as agreed upon by the HCAO stakeholders group, to include an increase in the hourly fee from $1.50 to $2.00 with an $80 per week maximum and the other modifications to the Ordinance, including: postpone the requirement to provide coverage for part-time workers under 20 hours per week until July 1, 2006; revise the language to exclude all types of student interns from HCAO; exempt non-profit relief workers; expand from a 30-day effective date for health insurance to the first day following the first complete calendar month worked by the employee; and support the pass-through for employers’ health insurance costs in the budgets for City contracts; and, be it

FURTHER RESOLVED, that the Health Commission will forward the proposed changes to the Board of Supervisors for consideration and approval.

I hereby certify that the San Francisco Health Commission at its meeting of July 20, 2004 adopted the foregoing resolution.

Michele M. Olson, Executive Secretary to the Health Commission