Health Care Debate: Re-examining the San Francisco universal health care
September 2009
SAN FRANCISCO, CA --- Battle lines are hardening over the Obama and Democrats’ health care proposal. Expect San Francisco’s “universal” health care program to be held up as a successful model of an employer-based health insurance program.
No surprise that a University of California report was issued in August showing that San Francisco’s mandated health care program had no significant negative impact on small businesses. But, take a closer look at the report and its authors.
The report was issued from the UC Labor Center, headed up by Ken Jacobs. The same Ken Jacobs who “provided consultation to the City and County of San Francisco on the development of the San Francisco Health Care Security Ordinance and was a member of the Mayor’s Universal Health Care Council before joining the Labor Center.” (From the Center’s web site.)
While I’m not suggesting bias, let’s unpack the study:
The city’s unemployment rate is at a 25-year high. The report found that in those industries most affected by the city’s health care mandates, unemployment is essentially no different than in neighboring counties.
But, hold on.
San Francisco’s employer pay-in for insurance benefits has been held artificially low, limited to a 3 percent increase per year — until next year. In 2010, the pay-in will be based on the actual annual increase in medical costs, which has been averaging 15-18 percent a year. In other words, the full impact of the program has yet to hit.
Take the city’s restaurant industry. A few years ago restaurant models began to change in San Francisco, partly in reaction to the city’s high minimum wage. The city’s full-service restaurants increasingly were replaced by quick service, low employee models; skilled workers replaced by low cost servers and bare-bones service.
Less servers, less jobs, and so less layoffs in the current downturn.
Meanwhile, the city’s full-service restaurants are struggling. Empty restaurant spaces dot the city. (The mayor’s former restaurant corporation recently closed two restaurants, one in the hot SoMa district.) Along with the demise of full-service restaurants has come the decrease in skilled restaurant jobs and upward mobility.
And remember that unemployment statistics from the Bureau of Labor (used by the UC researchers) are based on workers claiming unemployment benefits.
The methodology doesn’t measure those out of work who no longer can claim unemployment benefits. It doesn’t measure the decrease in business formation.
The total economic impact of the city’s mandates — minimum wage, mandated health benefits, mandated sick leave, and high payroll and sales taxes have taken their toll. Charles Schwab Co. took notice and moved most of the company out of the city this year, along with thousands of jobs. Those jobs also didn’t appear in the unemployment statistics or the UC report.
Let’s hope Congress carefully evaluates San Francisco’s mandated health benefits with eyes wide open. Unlikely. Facts have been the first casualties of the national health care debate.
