Campos wins veto-proof support for closing the city healthcare coverage loophole UPDATED

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Sup. David Campos is finally closing the healthcare coverage loophole after being thwarted years ago by David Chiu and Ed Lee
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Sup. David Campos appears to have finally succeeded in his years-long quest to prevent San Francisco employers from pocketing money the city requires them to use for employee health care costs after winning over two key supervisors to secure a veto-proof majority at today’s [Tues/10] Board of Supervisors meeting.

His reform legislation on today’s agenda will be amended by Campos, he told us, to win the support of Sups. Mark Farrell and London Breed. The changes phase out the loophole over three years, making 60 percent of the money in employee health savings accounts off limits to employers next year, 80 percent the following year, and not letting employers reclaim any of these funds by 2017.

“Even if we don’t get to 100 percent right away, once you get past 50 percent it’s a done deal, so I feel good about it,” Campos told us, explaining that even the phased-in legislation will immediately discourage employers from using health savings accounts and to instead put that money toward private insurance or city-run programs such as Healthy San Francisco.

The veto-proof majority is key given that Mayor Ed Lee vetoed similar legislation in 2011, later signing a watered down compromise measure by Board of Supervisors President David Chiu that required employers to maintain the funds for two years before taking them back.

Campos said that reform clearly didn’t work, with that total funding left over in the health savings accounts rising from about $60 million two years ago to about $90 million now. That outcome was predicted by Campos at the time, noting that employers had a disincentive to encourage employees to tap the funds.

“It didn’t work. The numbers showed the money still wasn’t being spent, which is what we said would happen,” Campos told us.

Exacerbating the problem was the fact that the federal Affordable Care Act (aka Obamacare) placed new restrictions on how health savings accounts may be used, fro example banning their use on insurance premiums. Health savings accounts are widely considered far inferior to private insurance at providing quality healthcare, but federal law (ERISA) precluded the city from banning their use by employers to satisfy the city’s health coverage requirement.

Supervisors who haven’t yet committed to supporting Campos’ legislation are Chiu, Scott Wiener, and Katy Tang, but Campos predicted they may sign on now that the measure has a veto-proof majority: “We’re hopeful that with a veto-proof majority, it may be a unanimous vote at the board.”  

UPDATE 6/10: The board unanimously passed the measure on first reading, prompting a sustained standing ovation from the workers and labor advocates who filled the board chambers for the hearing.