San Francisco: A Public Option That Works
Aug 22nd, 2009 | 22 responses
Polimom wrote an excellent post just a few hours ago titled “Health Care and Insurance: A Lost (and Crucial) Distinction.” It is generating some great, instructive, civil discussion on a subject that I had not given much thought to.
I highly recommend you go there and partake in the discussion.
I have been there and learned a lot.
But I also learned something new when reading the New York Times today. At first, I thought about posting it as a comment on Polimom’s thread, but I don’t want to once more divert the discussion. So here it goes.
I have read about the Massachusetts “universal” health care plan and the mixed reports about its success.
A Times Op-Ed, “A Public Option That Works,” discusses the results of the only other “near-universal” health care plan in the United States: the one in San Francisco.
The article starts with two “burning questions” at the center of the health care debate in America:
First, should employers be required to pay for their employees’ health insurance? And second, should there be a “public option” that competes with private insurance?
The Op-Ed says that, ” Answers might be found in San Francisco, where ambitious health care legislation went into effect early last year.”
These are some of the points the authors use in answering the questions:
Today, almost all residents in the city have affordable access to a comprehensive health care delivery system through the Healthy San Francisco program. Covered services include the use of a so-called “medical home” that coordinates care at approved clinics and hospitals within San Francisco, with both public and private facilities. Although not formally insurance, the program is tantamount to a public option of comprehensive health insurance, with the caveat that services are covered only in the city of San Francisco. Enrollees with incomes under 300 percent of the federal poverty level have heavily subsidized access, and those with higher incomes may buy into the public program at rates substantially lower than what they would pay for an individual policy in the private-insurance market.
The authors maintain that in order to pay for this program, San Francisco has put into effect an employer-health-spending requirement, similar to the “pay or play” employer insurance mandates presently being considered in Congress.
They add that these spending levels are much higher than those mandated in Massachusetts, and more stringent than any of the plans currently under consideration in Congress. “Businesses can meet the requirement by paying for private insurance, by paying into medical-reimbursement accounts or by paying into the city’s Healthy San Francisco public option.”
As for results, according to the Times, “Thus far, around 45,000 adults have enrolled, compared to an estimated 60,000 who were previously uninsured.” A modest 20 percent of the covered businesses have chosen to use the city’s public option for at least some of their employees. “But interestingly…very few (less than 5 percent) of the employers who chose the public option are thinking about dropping existing (private market) insurance coverage.”
As to the impact of higher costs, the authors claim that the San Francisco experience should put to rest some of the concerns over how increased costs would seriously harm business: “Many businesses there had to raise their health spending substantially to meet the new requirements, but so far the plan has not hurt jobs.”
And how have employers adjusted to the higher costs, if not by cutting jobs?:
More than 25 percent of restaurants, for example, have instituted a “surcharge” — about 4 percent of the bill for most establishments — to pay for the additional costs. Local service businesses can add this surcharge (or raise prices) without risking their competitive position, since their competitors will be required to take similar measures. Furthermore, some of the costs may be passed on to employees in the form of smaller pay raises, which could help ward off the possibility of job losses. Over the longer term, if more widespread coverage allows people to choose jobs based on their skills and not out of fear of losing health insurance from one specific employer, increased productivity will help pay for some of the costs of the mandate.
They conclude:
The San Francisco experiment has demonstrated that requiring a shared-responsibility model — in which employers pay to help achieve universal coverage — has not led to the kind of job losses many fear. The public option has also passed the market test, while not crowding out private options. The positive changes in San Francisco provide a glimpse of what the future might look like if Washington passes substantial health reform this year.
Too small and non-representative an experiment, you say? Perhaps.
Not worth considering? You tell me.
Written by some flaming Liberal?
One of the writers is William H. Dow, – Nonpartisan Independent Health Analyst; Member of the Council of Economic Advisors during the Bush Administration and now a professor of health economics at the University of California, Berkeley.
His co-authors are Arindrajit Dube, an economist at the Institute for Research on Labor and Employment and Carrie Hoverman Colla, a doctoral student in health economics.
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22 Responses to “San Francisco: A Public Option That Works”
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I see one immediate obvious fallicy applying this to a national model.
” Local service businesses can add this surcharge (or raise prices) without risking their competitive position, since their competitors will be required to take similar measures. “
Not all business is local. This will just add yet one more burden of American companies competing in the global market.
Thanks, Leonidas, perhaps this is indeed “Too small and non-representative an experiment…”
[...] San Francisco: A Public Option That Works – The Moderate VoicePolimom wrote an excellent post just a few hours ago titled “ Health Care and Insurance: A Lost (and Crucial) Distinction.” It is generating some great, instructive, civil discussion on a subject that I had not given much thought to. I highly [...]
I think so DE, but it is something worth keeping an eye on, if they are able to expand their coverage more comprehensively in the future it might provide some interesting data. Thanks for the heads up on this.
As an SFer, I would say that while there are definitely limits to how this could be scaled up to use on a national level, it is working very well within the city. It should be noted that most of the people who work higher-paying jobs were already covered by their employer plans, so the biggest group of people to be covered by these new changes were restaurant and small business workers. There were lots of very vocal opponents that made very good arguments about the loss of small businesses here, but that has simply not materialized. For example, there are certain restaurants where they state on the bill something like “We have added a $4 surcharge to your bill to pay for health insurance for our employees”. This sort of thing goes over great in a place like San Francisco, where we are very liberal and have a very snobby foodie population accustomed to paying more for everything than in most places in the country, but it might not go over so well in other places. It is a San Francisco plan taylor made for the San Francisco population, but it has seemed to work extremely well here. 45,000 employees in the city who were previously uncovered by any sort of insurance can now get needed treatment, and even if there is no optometry or dentistry involved, it's a heck of a lot better than what they had prior.
Dorian, thank you for bringing this plan up for further thought and discussion.
While I see where Leonidas' objections are coming from, they don't apply to all areas of commerce. Thus, if *all* restaurants are adding 4% surcharges, the net effect is an increase to everyone who eats out. It doesn't affect global competitiveness if the particular service industry doesn't compete globally.
However, the article says ~25% of the restaurants took this approach — meaning the majority of them went another direction. Freezing wages (another solution by some) would ultimately have some real consequences, on both income levels (haven't we been talking about disparities?) and public coffers (via flat income taxes).
HSF is very specific in scope:
* Living on a combined family income at or below 500% of the Federal Poverty Level. See if you meet the income requirements
* A San Francisco resident who can provide proof of San Francisco residency;
* Uninsured for at least 90 days;
* Not eligible for public insurance programs such as Medi-Cal, Healthy Families, or Healthy Kids™;
* Between the ages of 18 and 64
The income requirements go up to 500% of current federal poverty guidelines — a number that makes sense in an expensive place like SF, but looks pretty generous in rural Arkansas (for example).
It's lack of portability is a problem for people who can only receive care via HSF, of course, but the logic of such a limitation when they're working in a vacuum and self-funding only makes sense.
Myself, I think it hasn't been running nearly long enough to draw real conclusions — and that's really part of the overall problem with the hc reform discussions in generall. Every plan on the table for consideration, from any corner of the spectrum, will have a rippling impact — and I suspect that long-term effects are not fully understood, by either their proponents or detractors.
Thanks for all the good comments.
It seems that most agree that the SF “experiment,” thus far, is too limited, too “tailored,” too “localized,” and hasn't been in effect long enought to draw nation-wide. long term conclusions.
As to the $4 surcharge by restaurants, I look at it this way: $4 on a, say, $80 dinner for two is 2% of the tab. We pay up to 20% on a tip. Make the tip 18% and voila, there you have your original 20 %…and for a good cause (18% is still a pretty good tip)
Good thing there are not too many “commenters,” on this thread ..would have caught my math error (and I am supposed to be a Math major—).
Of course $4 is 5 percent of $80.
So, instead of giving a 20 percemt tip, make it 15 percent. Still a pretty good tip, plus hopefully one is contributing towards the waiters' health care
Hi Dorian — funny that nobody was working the math (including me!).
But your approach only covers those restaurants that are truly sit-down, serve-the-meal establishments. Surely even SF has less labor-intensive servicers (think… take-out). Those folks would be in a different boat altogether.
Whether or not less affluent economies could absorb such mechanisms as easily as San Francisco is highly questionable.
@ D.E.
You might not realize this but in doing a “good deed” you would have just hurt the waiters financial situation. Let me explain:
You tip the waiter less to make up the difference, the surcharge that you pay goes to the business which then uses it to provide for all employees covered, dishwashers, cooks, prep staff, cashiers, all the other waiters who may or may not work as much, etc. So the waiter is getting less for the same work. Maybe 50 cents of that surcharge actually goes to your waiter's healthcare.
Pretty good (financial) analysis, Leonidas.
I just happened to pick restaurants and waiters as an illustration. But, as you know, the SF “experiment” applies to many other small businesses, and thus many other employees benefit from the health care delivery system.
But, regardless, your point is well taken.
Dorian..
Based on a few minutes with Google, some other features of Healthy San Francisco
* You are assigned a medical provider and locked into that provider for all services. You want to see
a specialist, it's only if referred by the gatekeeper.
* San Francisco General apparently handles all the emergency and inpatient services for the program. You are told to go there for emergency services. No other hospital can provide services to participants.
Bottom line, you get dumped into the County System for just about everything but primary care, a system that is legally obligated to provide indigent care in the first place. While county facilities can provide good care, it is usually accompanied by long waits for appointments.
Extrapolating this to a government run health care program (i.e. the public option) is tantamount to ridiculous. It is not an insurance program but a primary care gatekeeper system designed to reduce utilization and bring an additional source of revenue for indigent care into play from businesses.
It's also not clear how valid the claims of job preservation are. It would be very difficult to determine this one way or another without a major study of the cities businesses. If that's been done, it wasn't in anything I have read.
In short, the idea that this addresses any of the issues of health insurance is comparing apples to watermelons — not even close.
Thanks for your comments, DaMav. I agree, the program is far from perfect, but for those who didn't have any kind of healthcare before, it is a one hundred percent improvement.
On the other hand, anyone who lost their previous coverage when their employer shifted to this one might be quite a bit worse off.
” * You are assigned a medical provider and locked into that provider for all services. You want to see a specialist, it's only if referred by the gatekeeper.”
Hmmmmm. I am not “assigned” a provider. I can pick any from the limited PPO network. I cannot see a specialist unless referred by a gatekeeper (my primary physician). That's Anthem, Blue Cross. A corporate bureaucrat decides if I need anything more than a routine office visit. There's only one hospital in my town. There's nowhere else to go for ER care. The “horrors” of the SF plan are my reality anyway, under private insurance.
However, that's not how Medicare works. Under Medicare I could go to any hospital (if there were any others) and see any doctor who accepts new medicare patients (97% do accept some, same number accepting privately insured patients). So there are several “models” of how government could run a health care system.
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Some time the better option would be taking a individual health insurance which will solve all the issue.
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