Most workers have employer-provided health insurance. The old have Medicare and the poor Medicaid. Children have SCHIP and veterans have the VA. But what about the people who fall through the cracks? What about individuals who work for small businesses who don’t offer insurance, entrepreneurs, or illegal immigrants? Where can they get health care? An article in San Francisco Magazine discusses how the Bay Area provides health care for the uninsured.
Healthy San Francisco (HSF) is the city’s two-year-old health-access plan that provides healthcare access most uninsured resident aged 18 to 64, regardless of employment, citizenship, or preexisting conditions. In a city of 800,000 people, about some 63,000 people (~8%) use HSF. Journalist Justine Sharrock notes that “Healthy San Francisco isn’t insurance—it’s a system of providers that uses the city’s superb healthcare infrastructure: neighborhood clinics, community hospitals, public health centers, and the state-of-the-art resources of UCSF. It doesn’t replace other government programs, like Medicare or Medi-Cal; it just ensures that people who don’t qualify for them don’t fall through the cracks. To enroll, all you do is show proof of residency and income: The cap is now $54,150, though officials hope to open HSF to all income levels by the end of 2010. Other than a requirement that new participants be uninsured for three months prior to joining the program, there isn’t even a waiting period.”
HSF is, hands down, one of the best healthcare bargains anywhere. For individuals earning less than $10,830 annually, the program is free. For everyone else, basic enrollment is $20 to $150 per month (versus $409 for the average California insurance premium), with rock-bottom copayments: $10 for primary care visits, $200 for hospital admissions, and $5 to $25 for medications.
The main advantage of HSF is that sick people can get affordable health care. The article describes a woman named Sharon Donnelly who has hydrocephalus (i.e., a condition in which fluid develops in her brain) and found it “nearly impossible” to purchase nongroup coverage. Because she could enroll in HSF, she quit her library assistant job and gave up her private coverage. She is extremely satisfied with the care. In fact, the Kaiser Family Foundation found that 94 percent of users expressed satisfaction with HSF. Further, the program is inexpensive for users. “For those earning less $10,830 annually, the program is free. For individuals earning less than $10,830 annually, the program is free. For everyone else, basic enrollment is $20 to $150 per month (versus $409 for the average California insurance premium), with rock-bottom copayments: $10 for primary care visits, $200 for hospital admissions, and $5 to $25 for medications. Additionally, having HSF may attract more young, innovative people to San Francisco. These entrepreneurial people can work in small internet start-ups without worrying about how to get by without health insurance.
The main disadvantage of the plan is that it raises taxes and does not replace a comprehensive insurance plan. Let us return to the case of Sharon Donnelly. The availability of HSF allowed her to quit her job and employer the accompanying employer group plan in order to look for better employment. However, San Francisco taxpayers must subsidize such an expensive patient. In fact, the high cost individuals without access to employer-provided plans are the ones most likely to take up HSF. Small businesses cost are higher in San Francisco, partly because of a pay-or-play mandate which compels businesses to offer health insurance to their employees. “Businesses with 20 or more employees must contribute $1.31 to $1.96 per worker per hour toward some form of healthcare: either private insurance, a flexible spending account that sets aside money for health¬care needs, or the city option, including HSF.” However, the pay-or-play employer contributions to HSF make up only 11% of the program’s cost. No wonder San Francisco’s sales tax is 9.75%.
Additionally, the program only covers you when you’re in the city. If you’re injured outside of San Francisco—even in another Bay Area city such as Oakland or Palo Alto—then you must pay for care out of pocket. The HSF website even warns: “Healthy San Francisco is not insurance. If you have insurance, do not drop it. Insurance is always a better choice.”
Further, treatment can be slow. As part of being in the HSF, the author had to pick up her medications at San Francisco General’s pharmacy which she claims has “confusing or non-existent procedures” and took an hour to get her prescription filled. Although the Ms. Sharrock finds “the sense of camaraderie with the other people in line oddly comforting,” most people more likely believe that this is a serious inconvenience, especially for those with more rigid work schedules.
Finally, the creation of HSF will induce Tiebout sorting. If you am someone who earns $40,000 per year working for a small business in the city who does not offer insurance, living in San Francisco is a great way to get health insurance. However, if you make $200,000 working in the city with an employer-sponsored plan, you may choose to move to a nearby San Mateo county and commute to work. If this occurs, San Francisco will lose out on tax revenue from many of the high wage workers.
Overall, it is clear that individuals who participate in the HSF plan receive significant benefits. Because HSF is not self financing, those who do not participate in the plan will have to subsidize these costs. The effect of migration into/out of San Francisco is ambiguous: having HSF will attract workers but the higher taxes needed to pay for HSF will drive some people away as well. HSF is similar to the current health care reform proposals in that it will expand coverage, but does little to control costs or significantly change the healthcare system.