This blog was written by Rose Auguste and Judi Hilman of Health Access. Graphic courtesy of San Francisco Department of Public Health.
On Tuesday, August 4th San Francisco’s Health Commission authorized the first major upgrades to Healthy San Francisco and City Option, the main platforms for universal coverage in San Francisco, since full implementation of the Affordable Care Act (ACA). Under the resolution, adopted with unanimous support, an estimated 3,000 additional residents will be able to use their Medical Reimbursement Accounts, one of the key components of Healthy SF, to subsidize Covered California insurance up to income levels exceeding the ACA limits. These additional subsidies would be available to households up to 500% of the federal poverty level (FPL), which is equivalent to $100,450 for a family of 3. Subsidies on Covered California and most other health insurance exchanges only go up to 400% of the FPL.
Background on Healthy San Francisco
Passed in 2007, the original Healthcare Security Ordinance put San Francisco out in front of national health reform to create the first plan for universal coverage at the city level. Led by former Board of Supervisor Tom Ammiano, the San Francisco Board of Supervisors authorized the San Francisco Department of Public Health to create a plan for universal, affordable coverage and a “medical home” (patient-centered, comprehensive, coordinated care) for all city residents.
Under this historic measure employers with twenty or more workers have a requirement to provide healthcare to their employees, though they could fulfill this obligation in three ways:
1. Provide health insurance to their workers outright.
2. Contribute to Healthy San Francisco on behalf of their workers. Healthy San Francisco is a City-Option healthcare program in which residents can obtain comprehensive and coordinated health services in the context of a medical home.
3. Provide their workers with Medical Reimbursement Accounts (MRA). Under the MRA arrangements, workers pay out of pocket for a medical expense and then provide their employer with receipts for reimbursement, whether in whole or in part. Residents can also use their MRAs for healthcare services received through Healthy San Francisco.
Healthy San Francisco 2.0: The “Bridge to Coverage”
As noted in the Policy Memo used to help frame last week’s decision, the upgrades approved last week go to the heart of the Affordable Care Act and its promise to make coverage affordable for all Americans. But in places like San Francisco where the cost of living is very high, 60% higher than the national average, that promise has fallen short. For too many San Franciscans (not to mention other Californians) the ACA’s one-size-fits-all affordability standards don’t go far enough in making care and coverage affordable, ultimately defeating the broader goals of reform.
There lies the significance of last week’s resolution. Once fully implemented and assuming full federal and state cooperation, the “Bridge to Coverage” provision will allow San Francisco residents to dedicate a portion of their MRAs to subsidize their insurance in Covered California. Residents will no longer receive the exact (MRA) dollar amount from their employer; rather, they will receive an amount that makes coverage affordable to purchase health insurance.
Under the new Bridge to Coverage benefit premium assistance will cover up to 60% of premiums costs for the second-lowest cost Silver plan on Covered California—after federal subsidies are applied. What makes the SF upgrade really stand out is the focus on practical barriers to care in the form of out-of-pocket costs. The new program includes cost-sharing assistance to ensure that the Silver plan deductible is no more than 5% of income.
Most impressively, the re-configured MRAs cannot be used to subsidize bronze plans, the plans with the lowest (60%) actuarial value, because these plans end up shifting costs to the consumer or, even worse, discouraging the use of otherwise cost effective care.
The intent of the proposal is to leverage resources to provide premium and cost-sharing assistance to San Francisco residents purchasing on Covered California, while maintaining Healthy San Francisco for residents, including the undocumented, not eligible for ACA coverage or not able to afford it. Though not specifically endorsed by Health Access, another provision in the resolution gives employers incentives to offer wellness programs.
How Healthy SF 2.0 Came Together
The San Francisco Department of Public Health collaborated with the University of California Berkeley Center for Labor Studies to build the model for this groundbreaking proposal with support provided by the California Health Care Foundation. Health, community clinic and labor advocates, including Health Access’s Rose Auguste, attended last week’s hearing to testify in support of the proposal.
Going forward, the San Francisco Department of Public Health will work with a third-party administrator to implement this proposal by 2016.
Only three states (Massachusetts, Vermont, and New York) also with reforms pre-dating the ACA, have similar initiatives based on augmenting the subsidies provided by the ACA (learn more here). Together with these states, San Francisco is leading the national and state-level conversation about affordability standards and whether they should reflect regional variation in the cost of living.
This is great news for San Francisco—and potentially for other high cost of living areas of California. We believe that last week’s redesign will help strengthen San Francisco residents’ health and financial security, while stimulating a much-needed national and state-level discussion on affordability—how it should be measured, to what extent it should account for out-of-pocket costs, and how local communities can leverage the ACA but go further to achieve local priorities for reform.
For more information on San Francisco’s Healthcare Security Ordinance update, please click here.