An innovative San Francisco health-care law is prompting some businesses to raise prices and curtail hiring. But it also is showing early signs of doing what it was intended to do: push employers to defray medical costs for more workers.

The ordinance, approved in 2006, puts San Francisco among a growing number of regions experimenting with universal health care. A 2006 Massachusetts law requires residents to buy coverage; attempts by Maryland and Suffolk County, N.Y., to require employers to expand coverage of workers were overturned in court last year.

San Francisco’s law aims to provide affordable health care to the city’s estimated 73,000 uninsured residents, roughly half of whom work. It requires businesses with 20 or more employees to spend a minimum amount toward their health care, either by providing insurance, reimbursing medical expenses or contributing to a municipal health-services program. The first payments by big companies to the city’s program were due last week.

"They’ve made more progress than anyone expected," said Larry Levitt, a vice president at health-policy think tank Kaiser Family Foundation who has tracked health-care legislation for 20 years. If the city prevails in a lawsuit challenging the law, Mr. Levitt says, it would embolden other localities to attempt similar programs.

The ordinance has forced businesses with big populations of uninsured workers to adjust. San Francisco’s restaurants estimate that the added costs will cut into profit. A restaurant group sued the city, saying the law violates federal benefits legislation. The restaurants won an initial decision; the city appealed, and the U.S. Ninth Circuit Court of Appeals heard oral arguments April 17.

The employer mandate took effect for businesses with 50 or more employees in January. Many businesses soon began passing the cost on to customers — with varying degrees of subtlety. Legal staffing agency Kearney Boyle & Associates Inc. bills clients a "San Francisco health ordinance fee" of $1.17 per hour. The Steps of Rome Caffe adds a 5% surcharge to bills, and hands diners fliers describing the city’s "landmark solution" to health care. The Globe restaurant raised prices in odd increments, so customers might ask why a braised pork shoulder costs $22.20.

"None of us know what the h- we’re doing," said Eric Rubin, general manager of Mexican eatery Tres Agaves, whose menu notes a 3.5% charge for "San Francisco affordable health care legislation."

Mr. Rubin estimates that Tres Agaves is setting aside about $5,000 per week, equivalent to about one-third of its operating profit, for its 85 workers who previously had no health insurance; only managers had coverage before. Mr. Rubin crafted an explanation of how the restaurant is complying with the ordinance that servers distribute to diners who ask about the added charge. In an informal survey of other restaurants, Mr. Rubin found some adding a surcharge, some a per-head charge and others absorbing costs until the court’s decision.

Cole Hardware, a three-store chain, has a different challenge. It offers enough insurance coverage for a midsize business, which San Francisco defines as between 20 and 99 employees. But with staffing at 95, it is afraid to enter the large-business category, in which it would have to set aside more money. So President Rick Karp says he is slowly replacing part-timers with fewer full-time workers, and not replacing employees on maternity leave.

Despite the challenges, public-health experts say San Francisco’s ordinance is making headway. About 18,000 people — one-quarter of the uninsured — have enrolled in the city’s health-services program, and local businesses are seeking ways to cover health-care costs for hard-to-insure workers.

The Gap Inc. has 1,000 part-time workers in San Francisco. The retailer, based in San Francisco, offers all of its part-timers a group-insurance plan, but doesn’t contribute any of the cost. The company says it initially will comply with the law by paying into the city’s program, and is considering expanding health-care coverage for all its part-timers.

Cynthia Fassler, president of staffing agency TSS Personnel Agency Inc., says she offered health insurance to her 45 temporary employees earlier this year. Only two expressed interest; the others didn’t want to commit to a longer-term plan, she says. Ms. Fassler said she is considering reimbursing medical expenses directly.

At Tres Agaves, Mr. Rubin says he is negotiating with a health-care provider to offer insurance to his workers. That could make a difference for waiters such as Dino Moreno, 26, who isn’t concerned enough about health coverage to look for insurance on his own, but has joined group plans offered by previous employers.