Landmark Healthy San Francisco Remains Safety Net During Transition Period

By many accounts, Healthy San Francisco — the city’s landmark universal health care plan launched in 2007 — has been a success. Uninsured residents in one of the world’s most expensive cities finally had access to affordable, quality health care.

While the Affordable Care Act opened up the possibility that some of the 60,000 San Francisco residents participating in the program could obtain insurance, coverage remains out of reach for others, despite the availability of federal subsidies. To the relief of many, Healthy San Francisco will continue to operate for uninsured individuals who do not qualify for Medi-Cal or Covered California, such as undocumented immigrants. But the days of anyone signing up for Healthy San Francisco and eschewing insurance are over. As the end of 2014 approaches, tens of thousands of current Healthy San Francisco program participants are expected to remain uninsured, and the city is scrambling to create a plan to make federally required insurance affordable for them.

Facing a fine for not signing up for insurance has not been the only concern for Healthy San Francisco participants; they also worry about continuity of affordable care.

Finding a Way To Preserve San Francisco’s Safety Net

For months, the Universal Health Care Council — whose 41 members come from government, as well as businesses and health and labor groups — has worked to devise a plan to best implement the ACA in San Francisco. One of the primary recommendations was that the city’s Health Care Security Ordinance — the set of regulations under which Healthy San Francisco operates — be changed to close a loophole that was letting valuable funds slip out of certain types of health care accounts and into employer’s pockets.

One of the major facets of the HCSO was to ensure all patients received funding from their Health Reimbursement Accounts, a feature of Healthy San Francisco that previously has been exploited by employers as a loophole. When employees weren’t using HRA funds, some employers were diverting funds to themselves. 

Working closely with the Universal Health Care Council, Supervisor David Campos drafted legislation to protect the true nature of HSCO by phasing out over the next three years the option for employers to divert unused funds to themselves and instead only go toward health care.

Campos’ amendment, passed in June, requires DPH to “develop a plan to ensure that employer health care expenditures made to the city … can be used to maximize enrollment in health insurance through Covered California … in time for full implementation beginning in the 2016 Covered California Plan year.”

Working on Affordability

It is precisely because of the HCSO and Healthy San Francisco that the city is ahead of the curve on ACA implementation, San Francisco Department of Public Health officials said, but it does not solve the long-term issue of affordability.

“We see the Health Care Security Ordinance, and we feel really lucky,” said Hillary Ronen, legislative aide to Campos. “It makes the Affordable Care Act much more successful.”

“We’re not dealing with as much of a backlog of people who have had no health care at all, versus other cities in California,” said Ronen. “But we have different ideas about what is affordable than the rest of California.”

City officials are sensitive to the fact that Healthy San Francisco has been the only affordable health care option for certain individuals — such as part-time employees and employees of small businesses — and those people could continue to face difficulties in affording health insurance. San Francisco DPH estimates as many as 51,000 people may remain uninsured at the end of 2014, and nearly 15,000 will not be exempt from the individual mandate and its fines.

“For now, the policy is extended, so now we are charged with finding a way to make it more affordable for individuals,” said Colleen Chawla, director of policy and planning for the city’s DPH. “But how do we decide what is affordable? We have to devise a new definition for that.”

“San Francisco is such a high-cost city, with people living paycheck to paycheck — and spending most of that on rent — that health care is still unaffordable,” Ronen said.

Chawla noted that at the very least, the city knows how many people are uninsured and struggling to afford health insurance, facts that are not immediately known to other California city officials.

Plans for a Covered San Francisco Dropped

HCSO was not the original plan for preserving health care in San Francisco. When Campos and public health officials first started anticipating gaps in coverage with the implementation of ACA, they envisioned a program called Covered San Francisco that would have provided eligible participants with financial assistance to reduce the price of health insurance purchased through Covered California.

But the plan was scrapped due to feasibility, officials say.

“Covered San Francisco just wasn’t the best model,” said Chawla. “It was too prescriptive and rigid, and we faced challenges in opening it to all of San Francisco in the first place.”

The framework of Covered California will still be used as a guide for creating a public benefit program to increase affordability of health insurance for low-income San Franciscans, city officials said.

Considering Other Options

In early June, a small group of stakeholders — community clinic leaders, public health officials and government officials — met to discuss what the future of the ACA in San Francisco would be as Healthy San Francisco is phased out by the beginning of 2015.

“We came away from that meeting discovering that this is quite complex,” Chawla said. “There are a lot of moving parts.”

Chawla said DPH is considering a variety of strategies, from a voucher system to grant programs, but it will take considerable time to implement a plan.

Even those who are moving into Covered California appear to view living in San Francisco as a health hazard, according to a statement by public health officials.

Among those who signed up for coverage through Covered California in the exchange’s first enrollment period, San Francisco residents had the highest selection of catastrophic coverage in the state, with more than 9% of the non-subsidy population choosing those kinds of plans. San Francisco officials believe the high cost of living in the city influenced those decisions.

More than 40,000 San Franciscans purchased plans through Covered California during the exchange’s first open enrollment period. Like the rest of the state, more than 80% of San Franciscans enrolling in Covered California plans were eligible for federal subsidies.

While there is no mechanism in place to track whether a San Francisco resident moves from Healthy San Francisco to Covered California, Chawla said there has been an overall reduction in Healthy San Francisco participation.

“We don’t really know what that means yet,” she said. “It’s a hard situation to go through, and we have to really sift through to make sure we don’t overlook anyone or anything.”

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