San Francisco Chronicle - (Sunday)
$203 million eludes city’s unemployed
More than 1 in 6 San Franciscans will soon be out of work, according to the mayor’s estimates. Lines at food pantries stretch down the block. More city residents have already filed for unemployment benefits than during the 200709 recession.
And yet there’s $203 million sitting largely untouched that belongs to workers, but which so far they can’t easily access or use for necessities like food.
In a City Hall famous for red tape and bureaucracy, this one is a real mindbender.
About $138 million of the total $203 million is sitting in 104,000 individual medical reimbursement accounts, funded by employer contributions mandated by San Francisco’s oncerevolutionary Healthy SF program. The money is intended to reimburse employees for health care costs, but some say it’s so frustrating to access, they don’t even bother.
And so a lot of it just sits. And sits.
After 24 months, the funds are “deactivated” and can be used by the city as long as they pay back employees who come calling for it later. There’s $65 million in the deactivated pot for a total of at least $203 million contributed on behalf of employees, many of whom have been laid off because of the COVID19 pandemic and could really use their own money back.
Lana Porcello, owner of Outerlands, a restaurant in the Outer Sunset, estimates she’s contributed at least $680,000 on behalf of her employees over the years and said she’d be shocked if more than $80,000 of it was ever claimed by them.
“There’s $600,000 out there that never reached our staff,” she said. “It’s so hard to use. It’s so hard to get the money.”
Last year, she opted to purchase a Kaiser health insurance plan for her staff instead.
“Just so the money wouldn’t be getting wasted anymore,” she said.
But that $600,000 is still sitting there, and it would come in handy now that Porcello has shuttered her restaurant and laid off 51 people. After the city’s shelterinplace rules were issued, closing restaurants except for takeout and delivery, Porcello tried going the takeout route but couldn’t make it pencil out financially. She also thought it endangered her employees’ health to have them continuing to mix with the public.
Now her employees are scrambling for unemployment benefits, and Porcello is scrambling for small business assistance. The federal government’s Paycheck Protection Program, which gives forgivable loans to small businesses to make eight weeks of payroll, doesn’t make sense for her because it requires employee levels to be maintained.
She doesn’t know whether she’ll be able to reopen Outerlands at all. And if she does, she’ll likely have to cut her clientele in half to ensure tables are spread 6 feet apart, meaning she wouldn’t be able to afford the same staffing levels.
One way to help her employees would be for the city to release their medical funds back to them. Porcello would like the $600,000 she contributed for her employees to go back in their pockets.
“The fact that this money is sitting in their name technically on paper and yet they can’t receive it for a health situation is completely unacceptable,” she said. “We’re in a public health crisis, and I don’t understand what the program is for if it isn’t to serve those individual people at this moment.”
The money comes from the 2006 Health Care Security Ordinance, which at the time made San Francisco the first city in the country to provide universal health care for its residents. Back then, 10% of San Franciscans lacked health insurance.
The law requires employers to provide health insurance or make payments to the city on their employees’ behalf. Currently, employers with at least 20 employees must pay $2.05 to $3.08 per hour per employee depending on the size of the staff.
It was a great idea in 2006, but is less essential now that the Affordable Care Act and Covered California mean nearly every San Franciscan has health insurance anyway.
And now that the coronavirus has plunged so many city workers into unemployment, the money should be used to help them meet their basic needs. Rent and groceries wouldn’t count as reimbursable costs, but they’re clearly needed for one’s good health. The San Francisco Chamber of Commerce asked Mayor London Breed and the Board of Supervisors in March to release the funds to provide “restaurant, bar and retail workers their wages from lost hours during the COVID19 public health crisis.”
And the San Francisco Council of District Merchants Associations — which represents business groups ranging from the Arab American Grocers Association to the West Portal Merchants Association — has made the same request.
So far, city officials agree with the idea in concept, but haven’t come up with a legal mechanism to make it happen.
Jeff Cretan, spokesman for
Breed, said, “The mayor believes we need to put these funds to work now to support workers during this public health crisis.”
Supervisor Hillary Ronen said that “legally, it’s very complicated.” She’d like to see workers who lost their health insurance when they were laid off get the money to buy new insurance. Another idea is putting the money on health debit cards that the employees can use without all the paperwork requirements.
Another change she’d like to see is to end the requirement that employees file paperwork just to get access to their employers’ contributions in the first place. Currently, that extra step prevents many employees from ever using their own money, which is why so much of it is sitting in city accounts.
She said those workers who do authorize the creation of medical reimbursement accounts in their names use about twothirds of the money in them.
There are other wrinkles that need to be smoothed, too. Emily Schmalhofer, a longtime Outerlands employee, said the whole program has grown far too complicated. She used to get reimbursed for acupuncture treatments to help with her anxiety. At first, reimbursements came through easily. And then they didn’t.
“Exact same cost, exact same receipt,” she said. “So I just stopped doing it.”
She recently tried to get reimbursed for purchasing Tylenol at Safeway during a big “apocalypse grocery shop,” but was rejected because there was no doctor’s prescription. Even though the whole point of overthecounter medication is you don’t need a doctor’s prescription.
It’s unclear why these rules are in place or whom to blame for them.
Regardless, it’s imperative the program be simplified and the money returned to the workers who so desperately need it. Let’s hope the City Hall officials who have demonstrated unusual speed and creativity throughout the COVID19 pandemic find a way to tap into this huge pot and help employees just when they need it most.