A majority of Americans obtain health insurance through their place of employment, or the place of employment of an immediate family member. The Census Bureau provides more detail in Figure 7, here. However, small employers, and employers in certain sectors of the economy (e.g., retail and agriculture) are much less likely to offer coverage. In the view of many, employers that fail to offer coverage to their employees (leaving aside, for the moment, the affordability of that coverage), are morally blameworthy free-riders. A popular policy response is a "pay or play" initiative. Employers can either offer health insurance to their employees ("play") or pay a tax/penalty to the state ("pay"). These initiatives may be subject to ERISA preemption, depending on how they are designed and implemented.
Last week, the 9th Circuit denied en banc review of the panel decision in Golden Gate Restaurant Association v. City and County of San Francisco. The case turned on whether ERISA preempted San Francisco's attempt to impose a mandate on employers to provide health insurance to their employees, or make payments to the city, with the precise amount to be paid tied to the number of employees, hours worked, and whether the employer was non-profit or for-profit. The panel upheld the law, overturning the district court's decision. Eight judges dissented from the denial of en banc review. The summary paragraph of the dissent is as follows:
Our decision in this case creates a circuit split with the Fourth Circuit Court of Appeals [in Retail Industry Leaders Association v. Fiedler, 475 F.3d 180 (4th Cir. 2007)], renders meaningless the tests the Supreme Court set out in Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983), conflicts with other Supreme Court cases establishing ERISA preemption guidelines, and, most importantly, flouts the mandate of national uniformity in the area of employer-provided healthcare that underlies the enactment of ERISA.
Judge Fletcher, who wrote the original panel disputed these claims -- mostly by repeating the arguments he had made in the panel opinion. Professor Ed Zelinsky of Cardozo has written a detailed critique of the panel's decision here. The plaintiff has vowed to seek Supreme Court review. A detailed chronology of all the filings in the case may be found here.