Health reform is already here — in San Francisco

Editor’s Note: This is a six-part series on the Healthy San Francisco program, which provides nearly universal health care for the city’s residents. Each part of the series will examine the program through the eyes of different people in the community, including a patient, a doctor who runs a clinic, two employers with different views of the program, and a hospital administrator.

The overhaul of the health care system finally approved in Washington will take effect in phases over the next few years. But in San Francisco, a new method of delivering health care is already in place.

Known as Healthy San Francisco, it is designed to care for the poor and under-served. It provides universal access to health care, comes with a public option, and has no exclusion for prior medical conditions. The only catch is that coverage is available just within the 49 square miles that make up San Francisco.

“There’s nothing else like it in the country,” says Mayor Gavin Newsom. “It’s not perfect. It’s not portable. It’s not insurance. But it’s health care.”

San Francisco Mayor Gavin Newsom.

Since the program began enrolling patients three years ago, it has signed up 50,000 of the estimated 60,000 eligible uninsured adults in San Francisco.

Residents aged 18 to 65 whose income is below the federal poverty level can join Healthy San Francisco and pay nothing except a small co-payment for medical visits. Residents who earn up to five times the poverty level pay a fee on a sliding scale up to $150 a month.

Patients can choose a “medical home” from among three dozen public and private clinics and hospitals, including Kaiser Permanente, which joined last year. In theory, the person’s primary care doctor is responsible for managing his or her care and coordinating among any specialists, clinics or hospitals that the patient visits.

A survey of patients by the Kaiser Family Foundation in August found that 94% are satisfied with the program. The study also found that Healthy San Francisco patients are sicker than the average San Franciscan and use health services more.

sf general
San Francisco General Hospital plays a major role in providing health care under the Healthy San Francisco program.

A separate city study of patient care comparing the program’s first two years found that emergency room visits among members dropped 27% per capita in the second year, an indication that the program could eventually reduce health care costs.

Tangerine Brigham, director of Healthy San Francisco, notes that the program has been able to take several steps included in the stalled federal legislation: Establish medical homes for uninsured patients, offer a choice of providers, and focus on preventive care. Providing care under Healthy San Francisco is costing less than $300 a patient per month, she said.

“We have done those things and we haven’t disrupted the health insurance market,” she said. “More importantly, people seem to be satisfied and, my god, it’s run by the government – a public option.”

Businesses with 20 employees or more that do not provide health insurance for their employees must pay $1.31 an hour for each worker. Businesses with more than 100 employees must pay $1.96 an hour.

About 1,000 businesses have chosen to pay into the program rather than provide health care. About $14 million of the program’s $126 million budget comes from employer payments.

The Golden Gate restaurant association filed suit in 2006 seeking to block the required employer contribution and won in district court. The decision was overturned by the U.S. Ninth Circuit Court of Appeals and the restaurant owners appealed to the U.S. Supreme Court. The high court has asked the Obama Administration to weigh in before deciding whether to accept the case.

But even the Restaurant Association praises the success of Health San Francisco in providing medical care for the uninsured.

“What Healthy San Francisco does is improve the health care safety net and no one can be opposed to that,” said Kevin Westlye, the association’s executive director. “It’s the employer mandate we object to.”

Gavin Newsom photo by Josh Thompson.
SF General Hospital photo from DANTC.

Part 2: A patient’s perspective.


Aurelio Duran has always known he is lucky to live in San Francisco. At first, it was because he loved the city and its music scene. Today, it is also because San Francisco offers universal health care.

Duran, a machinist and singer who emigrated here from Ecuador more than 40 years ago, is a vigorous 64. He had a job at a company in Oakland that made artificial hearts and planned to work until he was 66.

Aurelio Duran, 64, is a retired machinist and singer who began receiving medical care through Healthy San Francisco two-and-a-half years ago after losing his job, having trouble with his own health insurance and suffering from kidney stones. Photo by Richard C. Paddock.

But starting in 2006, he experienced a run of bad luck: He was laid off when his employer went bankrupt. He couldn’t find another job and his unemployment insurance ran out after six months. And when he suffered a recurrence of excruciating kidney stones, he found his doctor no longer accepted his health insurance because of a dispute with the insurance company over reimbursement.


As Duran struggled to get the medical care he needed, he learned from a friend about Healthy San Francisco and its goal of ensuring that every San Franciscan receives adequate health care. Duran was delighted to discover that he was eligible – and that he did not have to pay a dime.

He enrolled in mid-2007 and made San Francisco General Hospital his medical “home.” His primary care physician referred him to various specialists; his kidney condition soon cleared up and he received an examination for glaucoma and treatment of a minor prostate problem.

Duran later put in for his pension and now pays $50 a month for Healthy San Francisco.

“I feel great,” he said as he sat in the living room of his home in the city’s Excelsior District. “Since three years ago, my health has improved greatly. The hospital is full of good doctors.”

Duran came to the U.S. from Ecuador in 1969 at age 24. He had served as a machinist for three years in the Ecuadorian Navy and in 1969, when the United States experienced a machinist shortage, he received a U.S. work permit.

In 1974, he paid $29,000 for the Excelsior house where he and his wife still live. For 20 years he sang in the Bay Area band “Sonido Cinco,” meaning Sound Five.

Today, he believes the care he receives through Healthy San Francisco has restored him to good health and will help him avoid the emergency room.

If the program wasn’t available? “I don’t want to think about it,” he said, “not even for my worst enemy.”

His situation will change again in June when he turns 65 and must switch to Medicare. He is anxious about the possibility of changing doctors, but will be pleased to have coverage throughout the country.

For Duran, like other patients, the biggest disadvantage of the city program is that it is limited to San Francisco. For now, he has no medical coverage whenever he leaves the city. He thinks twice about crossing the Bay Bridge, even for the afternoon.

“When I have something important to do, I have to take my chances,” he said. “Otherwise I would feel like a prisoner in my home.”

Part 3: A doctor deals with the rush for care

Dr. Kenneth Tai is a physician and medical director of North East Medical Services, a network of clinics that has 11,000 Healthy San Francisco members as patients.

When the Healthy San Francisco program began three years ago, Dr. Kenneth Tai and his clinic on the edge of Chinatown were flooded with thousands of new patients. Many had serious health problems that had long been neglected.


Some patients had suffered debilitating strokes and were not receiving adequate care, said Dr. Tai, medical director of the North East Medical Services clinic. Others came in with pains they had ignored only to find they had cancer.

“We have quite a number of sick patients that have come through because of Healthy San Francisco,” he said. “A lot of patients with stroke and they can’t walk. Or cancer that was diagnosed because of Healthy San Francisco. They were not being cared for appropriately because of access issues.”

Today, more than a quarter of the clinic’s 40,000 patients are enrolled in San Francisco’s innovative health care program. Dr. Tai sees it as an important step in serving patients who had been unable to afford medical care.

“Healthy San Francisco is a great start toward a universal health care program,” he said. “Healthy San Francisco has enabled a lot of patients to sign up and not worry, ‘Will I be able to pay?’”

The North East Medical Services is a non-profit community clinic that began treating poor patients in Chinatown 38 years ago. It now has five locations.

NEMS, as it is known, was one of the first two Healthy San Francisco clinic sites. “It’s our mission to serve the underserved,” Dr. Tai said. “When Healthy San Francisco came along, that was the type of patient we were serving a lot of already.”

Dr. Tai, 35, became medical director a year ago and spends half his time as an administrator and half seeing patients. Most of the clinic doctors and staff are multilingual. Dr. Tai, who was born in Taiwan and grew up in Chicago, speaks Mandarin and Cantonese.

Of the 11,000 NEMS patients covered by Healthy San Francisco, about half are new to the clinic. The clinic receives a flat fee from the city for each patient and provides all primary care services, preventive care visits, urgent care, medications and lab work. Those with serious medical problems are referred to a hospital.

“Fiscally speaking, it is at best break even,” he said. “The reimbursement is definitely not high. We try to provide the best quality care without breaking the bank.”

In the early days, the clinic was overwhelmed with Healthy San Francisco patients eager to see a doctor. Many were so happy with the free service, they returned frequently. To reduce the crowds, NEMS began requiring a $5 co-payment for the poorest patients and $10 for those with higher income.

“Once patients get their universal access program, the demand is very great,” Dr. Tai said. “They all want to come and see a doctor.”

The clinic also has expanded rapidly. In the past year, it has hired a dozen new doctors. Using federal stimulus money, it added 10 exam rooms to its main clinic on Stockton Street.

With the city program, Dr. Tai sees a shift towards prevention, which experts hope will contribute to a healthier community and reduce medical care costs.

“It’s really going from a paradigm of taking care of the sick to a model that tries to prevent people from getting sick,” he said. “That’s where we are heading with Healthy San Francisco and where we are heading as a nation. We are very excited about that.”

Part 4: For universal health care, but not on his shoulders

Daniel Scherotter, a restaurant owner and chef, is leading the fight against Healthy San Francisco. It is not that he opposes the health care program. He simply thinks the city’s businesses, particularly restaurants, should not be required to finance universal health care.

As a past president of the Golden Gate Restaurant Assn. and chef and owner of Palio D’Asti restaurant, Scherotter is backing a lawsuit that challenges the Healthy San Francisco law. The case is now before the U.S. Supreme Court.

Daniel Scherotter, a restaurant owner and chef, is leading the fight against Healthy San Francisco, the city’s universal health care program. Photo by Richard C. Paddock.

“San Francisco loves its restaurants but it doesn’t treat us very well,” he says.

For Scherotter, the adoption of Healthy San Francisco is one in a series of city actions that has placed a growing burden on small businesses and made it hard for them to survive. San Francisco’s $9.79 minimum wage and its required 9 days of employee sick leave are among the highest in the nation, he notes.

Under Healthy San Francisco, companies with 20 or more workers must provide employees with health insurance or health reimbursement accounts or pay the city $1.31 per hour for each worker. The rate rises to $1.96 an hour for employers with 100 or more workers.

“Healthy San Francisco is definitely onerous,” Scherotter says. “It’s the straw that broke the camel’s back, which is why we’re suing.”

At one point, he lived in Italy and came to appreciate Europe’s health care system. Like many San Franciscans, he favors universal health care and likes the way care is provided under Healthy San Francisco. His problem is with forcing the low-wage, labor-intensive restaurant industry to shoulder the costs.

Even before the recession, the number of restaurants in San Francisco was shrinking about 5% a year, he said. Several restaurants near his Sacramento Street establishment have closed. Others have gone to self-service to reduce their labor costs.

“I look around here and I am the only major restaurant on the street,” he says.

Scherotter is the son of a lawyer and has a degree in philosophy. But what he really loves is cooking. After college, he came to San Francisco in 1993 to attend the California Culinary Academy.

He got one of his first jobs as a cook at Palio D’Asti in San Francisco’s financial district making $9 an hour and worked his way up, eventually becoming the chef and buying the restaurant.

Many restaurants have added a surcharge to help cover the cost of Healthy San Francisco and put a note on their menus informing customers of the extra fee.

“It has been effective in making a statement,” says Scherotter, although he doesn’t add a surcharge at Palio D’Asti.

Scherotter would like to see the city – and the nation – take an entirely different approach to health care: spend more on better quality food and less on health insurance.

“Only a chef could say this, right?” he offered. “But why food doesn’t have a part in the health care discussion I don’t have any idea.”

Europeans who eat a Mediterranean diet are healthier than the average American, he notes, not because their doctors are better but because their food is healthier. Buying cheap, government-subsidized, processed food leads to higher health care costs.

“People spend very little money to eat crap and then have to pay for health insurance,” he said. “It’s about as backwards as it can get. It would make more sense for employers to give lunch insurance to their employees.”

This employer supports the health care mandate

The business of Nibbi Brothers is constructing buildings, not filing legal papers. But when San Francisco city officials asked the company to support its universal health care program, Nibbi Brothers agreed to join the court battle over Healthy San Francisco.

The Potrero Hill construction company submitted an amicus brief to the U.S. Supreme Court last year urging the justices to uphold the law that established San Francisco’s health care program and required companies to pay for health coverage for their workers.

Bob Nibbi, president of Nibbi Brothers Construction, supports the Healthy San Francisco program because it forces his competitors to offer health benefits to their workers, as his company has done for year.

In its brief, Nibbi Brothers argues that Healthy San Francisco is good for employees and the community. The city should avoid a “race to the bottom,” the company says, in which employers try to remain competitive by refusing to provide health benefits for their workers.

Bob Nibbi, the construction company’s president, said his firm already pays more for employees’ health care than required under the law. He would like to see his competitors — especially contractors who cut costs by employing non-union workers — contribute to their employees’ health costs.

“What we spend on health care greatly exceeds the bar that the ordinance sets,” Nibbi said. “But there are some of our competitors out there who don’t have the obligation to pay for health care.”

Nibbi Brothers is something of a rarity in San Francisco. Bob Nibbi and his brother, Michael, are the third generation of brothers to operate the construction company, which has been in business for nearly 60 years.

Nibbi Brothers uses only union labor. And long before Healthy San Francisco came along, the company provided its employees with a full range of benefits, including medical coverage.

Nibbi said he would like to see construction maintained as a well-paying, skilled trade. But his firm increasingly finds itself competing with contractors who hire non-union workers and pay minimal, if any, benefits.

“As a union contractor it becomes harder and harder for us to compete with those kinds of companies,” he said. “The benefit of the health care ordinance is that, at least for health care, it raises the bar a little bit for those companies.”

Without the San Francisco law, Nibbi said, employers who chose not to provide health insurance would leave their workers to rely on the public health care system, placing a greater burden on taxpayers.

“Basically they are not paying the full freight for the necessary health care that employees and their families are going to need,” Nibbi said. “They are taking advantage of the public system, the public resources that are out there and supported by the taxes that we pay.”

With its stand on the lawsuit, the construction company is opposing the Golden Gate Restaurant Assn., which brought the lawsuit challenging the levy on employers to fund Healthy San Francisco.

Nibbi sympathizes with the restaurant owners and acknowledges that the health care law places a heavier burden on low-wage, labor-intensive businesses.

“The city does not make it easy to be an employer here,” he said. “The restaurant business is a very tough business. For us, you can maybe forecast a day 20 or 30 years from now when a union contractor is more of an endangered species and we could be in a similar situation.”

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