No More Delay: Proven Policy Solutions for New York City

No More Delay: Proven Policy Solutions for New York City
San Francisco, CA: Expanding Health Care Access with Healthy San Francisco

The Problem: Over 1.2 million New York City residents, one in six people under the age of 65, were uninsured in 2005.37 It is likely that this number has increased due to the rising costs of health care and the current economic recession.

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Most uninsured individuals do not have a regular source of health care. Nationally, the uninsured are four times more likely to delay or skip needed medical care than people with insurance and are also far more likely to forgo necessary prescription drugs.38 Uninsured people suffer more frequent and severe illnesses. Without treatment, diseases spread to others, conditions worsen, and health deteriorates. Uninsured people are more likely to be hospitalized for preventable conditions and to die prematurely.

The city bears some of the financial cost of caring for the uninsured. Uninsured residents are more likely to use the emergency room when they are sick or injured, and an emergency room visit is far costlier than a primary care office or clinic visit. Health care for the uninsured provided by the city’s public health care system, Health and Hospital Corporation, cost $850 million in 2008, over $500 million of which was paid for by the city.

Seventy percent of uninsured adult New Yorkers are actually employed, but their employers do not offer affordable health benefits. For example, research by the Brennan Center for Justice estimates that in 2006 approximately 28 percent of large grocery and food retail stores in New York City did not contribute to employee health costs. These companies gain a competitive advantage by shifting their employee costs to the public.

When public money is spent on covering uninsured patients instead of improving the quality of health services, everyone suffers. Catherine Abate of the Community Healthcare Network explains, “Let’s face it, we all pay whether we are insured or not. We all visit hospitals, clinics and private doctors. If they are seeing more and more uninsured, that affects the quality of care and their ability to hire staff, innovate and invest in new technology.”

The New York Health and Hospital Corporation provides access to free and reduced-cost health care, including primary and preventive care, for New York City’s uninsured lower-income residents through the HHC Options program. However, the program has only reached a paltry eight percent of the city’s uninsured population since its inception in 2004. Additionally, the Health and Hospital Corporation is facing worsening financial difficulties, which are culminating into a billion dollar debt leading to hospital and clinic closures, hiring freezes, and turmoil within the corporation. Without a more secure source of funding, the current system would almost certainly be unable to cover a large percentage of the population’s uninsured with HHC Options.

The Solution: Healthy San Francisco Health Care Program

Healthy San Francisco, implemented in 2007, provides access to health care for the city’s uninsured residents. The program is not insurance. Rather, it provides health services to residents at select facilities in the city, including several hospitals and 29 “medical homes.” A medical home is a clinic where program participants receive primary health care services. In addition, Kaiser Permanente, a managed care organization based in California, joined the program and will begin providing medical services to Healthy San Francisco participants at its San Francisco medical facilities on July 1, 2009.

Individuals are eligible for the program if they:

Live at or below 500 percent of the federal poverty level, reside in San Francisco, and are 18—64 years old;
Are uninsured and are ineligible for public insurance programs; and
Have been without employer-based or individually-purchased health insurance for at least 90 days.

Enrollment status is not contingent upon immigration status, employment status, or pre-existing conditions. Healthy San Francisco provides access to:

Primary, preventive, and specialty care;
Urgent, emergency, and hospital care;
Ambulance services;
Alcohol and drug abuse care;
Laboratory services and tests;
Durable medical equipment; and
Prescription medications.

The program, which is estimated to cost $200 million annually when it is fully implemented, is funded via federal, state, and city funds, participant fees, and an employer spending requirement.

Participant contributions include
- Quarterly fees dependent upon one’s income, ranging from $0 to $675;
- Point-of-service fees, depending on the patients’ income and type of care provided, ranging from $0 to $200.
Employer spending requirement:

The employer spending requirement went into effect in 2008 when the Healthy San Francisco was enacted, requiring medium- and large-size employers to make minimum health care expenditures on behalf of their employees. Covered employees include those working at least eight hours per week and have not waived the right to have their employer make a contribution for their benefit.

Businesses with 20-99 employees must contribute $1.23 per hour per covered employee.
Businesses with at least 100 employees must contribute $1.85 per hour per covered employee.

The employer spending requirement does not apply to small businesses and nonprofits with fewer than 20 employees.
To fulfill the requirement, employers may contribute to a city fund. Payments to this option fund health care for employees covered by Healthy San Francisco or a Medical Reimbursement Account (often used by those who work in San Francisco but live outside the city).

Impact

To date, Healthy San Francisco has succeeded in enrolling over two-thirds of the city’s uninsured population, or 42,000 individuals. The program has enabled these San Franciscans to receive care for chronic diseases and conditions that, if left untreated, can lead to chronic disease, premature death, and overuse of emergency care. The program is also allowing health officials in San Francisco to identify individuals who qualify for, but were not enrolled in, public health insurance programs such as Medicaid.

Cost-savings stem from fewer hospital and emergency room visits both directly and indirectly. Initial outcome data show that the cost of providing Healthy San Francisco is less than the estimated cost of providing program participants with private insurance. The data show that participants are relying more on their medical homes instead of hospitals as a usual site of care. The number of “avoidable” emergency room visits for Healthy San Francisco participants was lower in comparison to adult Medi-Cal (California’s Medicaid program) recipients.

Healthy San Francisco’s net costs were $600,000 in its first year—$4.9 million in start-up costs and $4.3 million in revenues. Projections for the second year show revenues to exceed costs by roughly $3.3 million, with nearly $20 million in revenues coming from the employer spending requirement.48 With annual per participant costs at roughly $3,360, employer contributions can fully cover health care costs for nearly 6,000 uninsured people. As of October 2008, over 1,000 San Francisco employers have opted to contribute to the city fund to fulfill their spending requirement. Contributions to the city fund currently account for approximately $14 million of the total revenues of Healthy San Francisco.

The Golden Gate Restaurant Association challenged the employer spending requirement in 2006, citing it as a violation of the Employee Retirement Income Security Act (ERISA). The court upheld the ordinance as valid because it does not require employers to establish ERISA plans or make any change to existing ERISA plans. Employers instead have the option of making payments to the city on behalf of their employees. Further, the ordinance is concerned with payments but not with the nature or quality of health care benefits employers provide.

The program has several potential benefits for employers. Healthy individuals are more productive in the workplace, less likely to spread an illness to other workers, and utilize fewer sick days. Additionally, the employer spending requirement levels the playing field for responsible businesses that previously offered insurance options to employees.

Implications for New York

The New York City public health care system’s health care program, HHC Options, provides affordable health coverage for primary, preventive, specialty, emergency, vision, and dental care, as well as prescriptions to New York City residents living at or below 400 percent of the poverty line, regardless of immigration status, employment status, or medical history. Members of HHC Options pay visit fees on a sliding scale based on their income and pay no participant fee; these fees apply to any of the Health and Hospital Corporation’s 11 hospitals and more than 80 clinics.

The San Francisco and New York City programs have many similarities; however there are some important aspects of Healthy San Francisco lacking in HHC Options that likely contribute to its comparative success:

Employer spending requirement and participation fees—HHC Options does not receive funding from an employer spending requirement or participation fees, two funding sources that contribute to Healthy San Francisco’s success. If New York effectively implements similar measures, a city health care program would benefit from millions of dollars of funding, enabling the city to improve care and expand it to more uninsured New Yorkers
Multiple health care providers—Health and Hospital Corporation facilities are the only sites at which HHC Options members can access care. A citywide program should seek a partnership between multiple health care providers, as Healthy San Francisco has done, to expand health care access, improve the quality of service, and discourage emergency room use.
Simple enrollment procedure—In order to enroll in HHC Options one must first make a medical appointment with an HHC Options provider and consult with a financial counselor at the time of the visit. Because the applicant may have to pay for the visit depending on subsequent enrollment in HCC Options or a public insurance option, some would-be applicants may shy away from applying to the program. Enrolling in Healthy San Francisco simply requires completion of paperwork and showing proof of residency at one of many enrollment sites throughout San Francisco. A streamlined process would likely encourage enrollment in a New York City health program
Expanded eligibility—New York’s health care program should expand its eligibility to include more of the uninsured middle class. Healthy San Francisco allows participation by those living up to 500 percent of the poverty line, while HHC Options limits eligibility to 400 percent of the poverty line, excluding over 150,000 uninsured New York City residents who fall in this range.

The most significant difference between the programs is Healthy San Francisco’s employer spending requirement. New York City has already attempted to create a funding mechanism similar to San Francisco’s. In 2005 the City Council passed the Health Care Security Act which requires grocery stores and other food retailers to contribute $2.50 toward health care for each hour an employee works, or $5,000 a year for a full-time employee. Mayor Bloomberg vetoed the Act and was overridden by the City Council. However, the Mayor has chosen not to enforce the Act after a ruling by the New York State Court of Appeals stated that the Mayor does not have to enforce laws that he believes violate state and federal statutes. The court’s ruling that Healthy San Francisco does not violate federal law should make the Mayor reconsider his stance and act quickly to extend health coverage to more uninsured New Yorkers.

care providers, as Healthy San Francisco has done, to expand health care access, improve the quality of service, and discourage emergency room use. </li><li>Simple enrollment procedure—In order to enroll in HHC Options one must first make a medical appointment with an HHC Options provider and consult with a financial counselor at the time of the visit. Because the applicant may have to pay for the visit depending on subsequent enrollment in HCC Options or a public insurance option, some would-be applicants may shy away from applying to the program. Enrolling in Healthy San Francisco simply requires completion of paperwork and showing proof of residency at one of many enrollment sites throughout San Francisco. A streamlined process would likely encourage enrollment in a New York City health program </li><li>Expanded eligibility—New York’s health care program should expand its eligibility to include more of the uninsured middle class. Healthy San Francisco allows participation by those living up to 500 percent of the poverty line, while HHC Options limits eligibility to 400 percent of the poverty line, excluding over 150,000 uninsured New York City residents who fall in this range.</li></ul>The most significant difference between the programs is Healthy San Francisco’s employer spending requirement. New York City has already attempted to create a funding mechanism similar to San Francisco’s. In 2005 the City Council passed the Health Care Security Act which requires grocery stores and other food retailers to contribute $2.50 toward health care for each hour an employee works, or $5,000 a year for a full-time employee. Mayor Bloomberg vetoed the Act and was overridden by the City Council. However, the Mayor has chosen not to enforce the Act after a ruling by the New York State Court of Appeals stated that the Mayor does not have to enforce laws that he believes violate state and federal statutes. The court’s ruling that Healthy San Francisco does not violate federal law should make the Mayor  reconsider his stance and act quickly to extend health coverage to more uninsured New Yorkers.