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Healthy San Francisco’s Lessons for National Health Reform

Is health reform to blame … for bad tipping?

It’s not a question that most health policy experts have had to answer. But forgive Bay Area residents for asking it.

The Healthy San Francisco initiative — a unique effort to boost care access for the city’s uninsured — has received plenty of press since its 2006 launch. Through HSF, more than 54,000 of the city’s 80,000 uninsured residents have been assigned a primary care medical home. About 1,900 individuals are still registering each month.

Yet most recent stories about HSF have focused on whether waiters are suffering instead of new findings that the uninsured aren’t.

Report on HSF Shows Program’s Promise

Released in September, Mathematica’s in-depth study tracks the first four years of HSF and uncovers new patterns in uninsured patients’ utilization.

The report’s most powerful takeaway: San Francisco’s non-urgent emergency department visits and preventable hospitalizations have fallen since 2007, in contrast to a surge across the Golden State.

To get their findings, Mathematica researchers contrasted patients at San Francisco General Hospital — the city’s flagship public hospital, which treated HSF’s target population group — with patients at 16 other public hospitals across the state.

About 6.5% of uninsured adults at SFGH were hospitalized for potentially avoidable conditions in 2006; that percentage had fallen to 5.8% in 2009. The state’s other public hospitals reported an uptick from 8.5% to 8.7% for similar patients across that period.

Although researchers caution against drawing a straight line between HSF initiatives and systemic improvements, they’re optimistic the data reflect the program’s focus on care access, provider responsibility and management of chronic disease.

Mathematica’s survey of key stakeholders also found that HSF retains broad-based support, employer mandate and all. Health care providers say they’re pleased, patients report high satisfaction and even most businesses are in favor despite new laws affecting employers’ health spending.

Why HSF Never Quite Made a National Splash

So why hasn’t this popular program garnered more attention?

Largely, it’s because of how the national reform debate unfolded.

Early in 2009, some advocates and pundits encouraged lawmakers to use San Francisco’s reforms as a template for what became the Affordable Care Act. Even as late as September 2009, NPR’s Scott Hensley wondered if HSF was “test-driving” a model for a nationwide public option.

But as Congress moved toward its major health insurance expansion — and a plan that resembled Massachusetts’ reforms — HSF became less of a model for access and more a laboratory for the ACA’s delivery system innovations.

Small Fee or Big Problem?

HSF also stayed just off the national stage because the Supreme Court consistently avoided entering into a legal fight over the program between 2008 and 2010.

A legal challenge filed by the Golden Gate Restaurant Association centered on a 2008 requirement that San Francisco employers with 20 or more staff members must pay at least $1.17 per hour worked for employee health care. Three-quarters of surveyed firms that year had increased health spending to comply with the law. Restaurants said they were especially hard hit.

Supreme Court Justice Anthony Kennedy twice rejected the GGRA application to suspend San Francisco’s mandates. In June 2010, the high court declined to consider a circuit court decision rejecting GGRA’s argument that the city cannot legally compel employers to pay for workers’ health benefits, ending the legal battle.

Key Takeaways for Policymakers

HSF’s under-the-radar achievements — and long track record — offer lessons for communities and lawmakers seeking to implement the ACA, advocates say.

Summarizing Mathematica’s findings for California Healthline, lead author Catherine McLaughlin identified four key takeaways.

First, San Francisco has benefited from using a centralized system to better track its uninsured population. The program’s focus on organizing existing resources and providing health care, rather than creating a new insurance program, also allowed the city to expand access at lower cost.

In addition, McLaughlin stressed that HSF relies on a medical home model, connecting each patient with a dedicated provider and creating physician accountability. Finally, setting aside funds to help low-income patients receive primary care at those medical homes ultimately cuts spending by keeping those patients out of the ED and hospital, McLaughlin asserts.

Some critics say that quickly expanding coverage to low-income patients — whether in San Francisco or across the nation — could tax the health care safety net and drive some physicians to opt out. And there are signs that HSF is straining access to the city’s providers, especially specialists who treat Medicaid patients.

But many physicians participating in HSF told Mathematica that they “are pleased to be part of the program.” The program’s experience also “suggests that once providers experience the benefits of the [medical home] approach, they are likely to support it,” McLaughlin added.

Others have warned that the ACA’s pay-or-play provisions for employers will force firms to spend more on health care and ultimately trim payroll. However, the Center for American Progress’ Igor Volsky noted that San Francisco’s employer mandate hadn’t resulted in any apparent job loss through mid-2010 — and its mandate is more restrictive than the ACA’s.

Settling Up

Of course, well-intentioned mandates can lead to unexpected consequences — and unwanted headlines.

San Francisco residents are still buzzing over a recent Wall Street Journal article that some local restaurants — which tend to ask patrons to pay a 3% or 4% surcharge for HSF and other city ordinances — have been pocketing the extra funds, rather than paying out benefits to employees’ health reimbursement accounts. Others suggested that diners are withholding some tips, expecting the surcharges for HSF to cover gratuity.

If anyone can solve the mystery of servers’ savings, we’ll clear it up in a future “Road to Reform” — and you’re always welcome to tip California Healthline at

Here’s what else is happening around the nation.

Administration Actions

  • Last week, HHS approved a partial medical-loss ratio waiver for Georgia. Under the MLR rule, private insurers must spend at least 80% in the individual market or 85% in the group market of their premium dollars on direct medical costs (Baker, “Healthwatch,” The Hill, 11/8). The state had requested to phase in the requirements to allow insurers to adjust to them. Under the proposed phase-in schedule, insurers in Georgia would have to provide 65% of premium dollars in benefits this year, 70% in 2012 and 75% in 2013. Instead, HHS said it would allow insurers to provide 70% this year, 75% in 2012 and 80% in 2013 (Adams, CQ HealthBeat, 11/8).

Challenges to Reform

  • In a report issued last week, the conservative Judicial Crisis Network revived calls for U.S. Supreme Court Justice Elena Kagan to recuse herself from future discussions of the pending lawsuits against the federal health reform law. The group said Kagan should not participate in the cases because she served as U.S. solicitor general in the Obama administration when the law was enacted and the U.S. Justice Department began preparing its defense of the law and the individual mandate (Baker, “Healthwatch,” The Hill, 11/9).
  • Last week, Health Care for America Now renewed calls for U.S. Supreme Court Justice Clarence Thomas to recuse himself from any reviews of the overhaul. Liberal groups have questioned whether Thomas should be disqualified from a high court review because his wife has actively and publicly opposed the overhaul. In addition, Thomas allegedly failed to disclose his wife’s income from groups that oppose the overhaul (Baker, “Healthwatch,” The Hill, 11/10).

In the States

On the Hill

  • Last week, the Senate voted 95-0 to pass a House bill (HR 674) that would repeal a contractor withholding tax and fix a loophole in the federal health reform law that would allow millions of middle-income early retirees to qualify for Medicaid (Carter, CQ Today, 11/10). In October, the House passed similar legislation (HR 2576) and separately passed another bill that would close the Medicaid loophole. The two bills were combined — so that the money saved by fixing the Medicaid error would offset the loss of the tax withholding funds — and sent to the Senate (Pear/Steinhauer, New York Times, 11/10).
  • In a letter to HHS Secretary Kathleen Sebelius last week, Sens. Tom Coburn (R-Okla.), Michael Enzi (R-Wyo.) and Orrin Hatch (R-Utah) asked her to outline how the Center for Medicare and Medicaid Innovation is using its $10 billion in funding (Zigmond, Modern Healthcare, 11/10). CMMI was established by the federal health reform law to evaluate strategies to improve care and lower costs. The letter requests data on specific CMMI demonstration programs, whether such programs have produced any savings and how HHS will evaluate their effectiveness. The lawmakers also asked the Government Accountability Office to study the implementation of CMMI and other CMS initiatives (CQ HealthBeat, 11/10).

Rolling Out Reform

  • At a recent national meeting, many state Medicaid officials privately acknowledged their concerns that the medical-loss ratio regulations mandated by the federal health reform law could be extended to Medicaid managed care plans. Under the MLR rule, private insurers must spend at least 80% in the individual market or 85% in the group market of their premium dollars on direct medical costs. The officials speculated that the MLR regulations could be incorporated into a forthcoming rule affecting the managed care plans, an option that CMS officials signaled they were considering earlier this year (Adams, CQ HealthBeat, 11/8).
  • The Office of Management and Budget is reviewing a final MLR rule that is expected to outline how so-called “mini-med” plans will operate under the federal health reform law. Many health industry lobbyists expect the final rule will change how mini-med plans work in the future. However, they are not expecting major changes for most standard health plans under the final rule. Once OMB confirms the rule complies with the administration’s overall objectives and addresses any protests from other agencies, it is expected to publish it in the Federal Register within a week (Adams, CQ HealthBeat, 11/10).

Spotlight on ACOs

  • Later this month, the National Committee for Quality Assurance will begin accrediting accountable care organizations, which are being established under the federal health reform law. Margaret O’Kane, president of NCQA, noted that ACOs advance delivery reform efforts that originated with medical homes, which NCQA already certify. O’Kane added that NCQA’s ACO standards will draw from the group’s quality and performance research, comments from an advisory panel and previous successful prototypes. The accreditation process will focus on seven areas, including structure and operations, access to needed providers, and patient rights and responsibilities (Evans, Modern Healthcare, 11/14).

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