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San Francisco Moves Forward With Health Access Plan

Reactions range from wholehearted approval to angry threats of lawsuits but players on almost all sides of San Francisco’s ground-breaking universal health access plan seem to agree on one thing: something has to change.

Citing the rising number of uninsured and their financial and moral drain on society, San Francisco’s mayor and supervisors last month unanimously approved the nation’s first universal health access plan at the local level. Mayor Gavin Newsom signed the legislation on Aug. 7.

The plan covers only residents of San Francisco and only while they’re in the city, but the fact that it exists at all in a nation and state with no overarching health plan is sending ripples far beyond city limits.

Karen Davenport, director of health policy at the Center for American Progress, a Washington, D.C., think tank, urges national policy makers to take heed and follow San Francisco’s lead.

“Our national political leaders, business executives, physicians and other stakeholders should derive inspiration and motivation from the City by the Bay and make reforming our health care system a national priority,” Davenport said.

Health and social services officials are greeting the plan with open arms, but critics say too much of the financial burden falls on employers. Although they talk of the possibility of lawsuits challenging the city’s new law, critics also say they understand the need for some kind of health relief.

“We certainly believe the nation is in a health care crisis,” said Kevin Westlye, executive director of the Golden Gate Restaurant Association. “Frankly, I think it’s embarrassing that one of the wealthiest countries in the world doesn’t have a national health plan.”

“The real problem, though, is the rising cost of health care, not who pays for it,” Westlye said. “I think until we get some kind of national plan in place, costs are going to continue to rise until nobody’s going to be able to afford it — employers, employees, nobody.”

Some small businesses in San Francisco might say that day has arrived. Jim Lazarus, vice president of the San Francisco Chamber of Commerce, said the new costs of the San Francisco Health Access Program could put some businesses out of business.

Westlye and Lazarus said that their organizations have not yet discussed the possibility of legally challenging the new law but that individual business and restaurant owners have.

San Francisco Health Director Mitch Katz predicts the plan will withstand legal challenges and will go into effect next year, as planned.

Plan Details

The first phase of the program, for employers with 50 or more workers, is scheduled to start July 1, 2007. The second phase, for employers with 20 to 49 workers, is to go into effect in April 2008.

The San Francisco Health Care Security Ordinance, a combination of separate proposals by Supervisor Tom Ammiano and Mayor Gavin Newsom, will offer coverage to about 82,000 people — 11% of the city’s population — with no restrictions regarding pre-existing conditions, immigration status or employment. Because the health access plan is not insurance coverage, it basically amounts to subsidizing coverage for people who aren’t eligible for Medi-Cal but do not have other coverage. Many of these people are employed by businesses that say they can’t afford to provide health coverage for their workers.

Uninsured people can join by paying an individual premium based on income or through employers who can pay premiums for their workers as a group. The ordinance sets a minimum spending requirement for medium and large businesses to discourage companies from dumping workers into the public system. Employers with fewer than 20 workers are exempt.

The program will provide primary and specialty care, hospitalization, and prescription drugs. Participants will be assigned a primary care physician and will be cared for at medical facilities and hospitals already treating Medi-Cal beneficiaries.

Emphasis will be on preventive care, managing chronic conditions, and treating illnesses early rather than using one of the most expensive health care options — emergency care.

Having health insurance will not be mandatory to live in San Francisco, but officials believe most uninsured residents will welcome coverage with a reasonable sliding scale for monthly premiums and copayments. Individual premiums will range from $3 per month for those at the lowest income levels to more than $200 per month for those at the highest. People earning as much as $50,000 a year will be eligible.

The program’s total cost of about $200 million a year will be shared by the city, participants, businesses and the federal government. The city will put in the $104 million it now spends on care for the uninsured. Premiums and copays from participants will bring in about $60 million more. The balance will come from greater federal cost-sharing and employer contributions. Medium-size businesses with 20 to 99 workers that don’t provide health coverage will contribute $1.06 per hour, per worker, and large businesses with 100 or more workers will pay $1.60 per hour, per worker.

Unique Circumstances

Although San Francisco leaders hope their example might spawn similar programs elsewhere, following this lead won’t be easy for other cities and counties. San Francisco supervisors are in the unusual position of having jurisdiction over both city and county laws. Most other cities do not have an existing county-operated health plan or infrastructure for launching this kind of program. With a dense urban population tied to a county health system, San Francisco already has a considerable investment in caring for the uninsured.

There are other impediments as well. Last month, a federal court nullified Maryland’s “Fair Share” law, which calls for employers with more than 10,000 workers to spend at least 8% of their payroll on health insurance or pay the difference to the state to offset public costs related to their employees’ health care. The Maryland ruling — which could have implications for San Francisco’s new ordinance, as well as other state and local efforts — was based on the Employer Retirement Income Security Act of 1974. ERISA allows large employers to establish national benefits programs, which the court ruled are exempt from state and local regulations.

San Francisco’s new program also might face an ERISA challenge, according to Nathan Nayman, executive director of the Committee on Jobs, a coalition of San Francisco’s largest employers.

“I think part of what you’re seeing in San Francisco is organized labor trying to establish a per-hour rate for health care, and ERISA pretty clearly states you cannot mandate how much business has to spend for health care,” Nayman said.

When Ammiano first proposed a plan to help the uninsured last year and then when Newsom came up with his tandem plan earlier this year, the focus was on doing the right thing for people who needed health care but couldn’t afford it.

“This is a moral debate as much as a political debate,” Newsom said. “If it’s not going to happen through national leadership or statewide leadership, then it has to happen on a local level.”

About 46 million people are uninsured or underinsured in the U.S., and research by the Urban Institute finds that the number is growing each year. In California, between six million and seven million residents have no coverage, with “people of color” more likely to be uninsured, according to the California Pan-Ethnic Health Network.

San Francisco’s 82,000 uninsured residents seem paltry next to huge and growing numbers elsewhere, but it’s “a great step forward,” said Martin Martinez, policy director for the California Pan-Ethnic Health Network.

Most officials agree true universal coverage is beyond the realm of local government, “but kudos to San Francisco for making an effort,” said Dave Kears, director of the Alameda County Health Care Services Agency across the bay from San Francisco. “If nothing else, they can shame the state and the feds into doing more.”

San Francisco officials are cognizant of the precedent they’re setting and the message they’re sending.

“It is possible to achieve universal health care,” said Kevin Grumbach, a physician, UC San Francisco professor and a member of the committee that hammered out the details of the plan. “If it doesn’t start nationally, it’ll have to start city by city.”

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