California Offers New Ways to Insure the Uninsured

In today's society, the ultimate goal for the healthcare system of the United States is universal health coverage for all residents. Most other developed countries possess universal healthcare systems that are run by their respective governments (Grosse 4). History has shown us that the United States is making slow and steady attempts to cover all of its citizens, with each try resulting in a program or policy that insures a group of people. For instance, in 1965, Medicare was created to insure those over 65 years of age, among other groups; in that same instance, Medicaid was created to cover the poor below the federal poverty level. Since its inception in 1997, the State Children's Health Insurance Program (SCHIP) has been covering previously uninsured children. Despite our efforts to decrease the amount of uninsured, as of 2002, there were 43.6 million uninsured in the United States (Bodenheimer 15). Insuring group by group is not effective enough; we must find a way to insure larger groups and create coverage programs with less qualification constraints.

Presently, federal or state government options exist for covering the elderly, poor, and children; however, there are those that remain uninsured because they fall somewhere in the middle of age ranges or income levels. For example, in 2003, 24% of people with incomes of $25,000 or lower, as well as 8% of people with incomes of $75,000 or higher, were uninsured (Bodenheimer 17). Although the uninsured may pay out-of-pocket for health care, as a population the uninsured are poor. Private insurance in the United States gives such unfettered access to medical care that it has clouded the view of the insured population; most Americans believe that the uninsured people in the United States can get care when they need it (Grumbach 2114). Contrary to this belief, "the full-year uninsured received about half as much care ($1,253 per person) as the privately insured received ($2,484)" (Hadley 67). A program must be created to insure the uninsured, because current measures, as evidence shows, cannot provide them with enough care. Due to recent activity in its health care programs, California can be observed as a microcosm for testing health policy aimed at insuring the uninsured. The present and future policy options being suggested and/or tested include Halvorson's proposal for California and the new Healthy San Francisco, the more innovative of the two.

Halvorson's Proposal

In 2006, George C. Halvorson, Francis J. Crosson, and Steve Zatkin, top executives at Kaiser Permanente, the huge health care conglomerate, authored "A Proposal To Cover The Uninsured In California." This plan outlined what they believed to be a viable method of instituting universal health care through insuring all of those living in California who were, as of then, uninsured. Though suggesting the plan for California specifically, the plan could serve as a model for future plan for other states. Although Massachusetts is considered a health care pioneer in the "states as laboratories" philosophy of health care reform, it is much wealthier than most other states and does not contain that many people who are uninsured. California, on the other hand, contains 10% of uninsured Americans, over 5 million people; it is thus comparable to other states with many uninsured residents (Halvorson w80).

Halvorson's proposal models the German health care system in which there is universal coverage, but not a single provider; both government programs and private companies can insure people. The proposal mandates that all residents of California must enroll in some form of health insurance, whether public or private. In order to facilitate this, two new government programs are to be created: CalPrime provides basic primary care and other forms of coverage to low income people, while CalCAT consists of a deductible and covers purely catastrophic medical cases with high costs (Halvorson w82). CalPrime acts much like Medicaid does, with enrollment qualifications based on income levels; however, it covers those not eligible for Medicaid. Under CalPrime, enrollees that are below the 200% federal poverty level (FPL) are not required to pay anything, and those above the 200% FPL but below the 300% FPL received heavily subsidized insurance (Halvorson w83). Those with higher income, above the 300% FPL, are also required to have health insurance, but are not eligible for CalPrime. They can enroll in CalCAT, for catastrophic medical cases, or get private insurance.

Halvorson's proposal for insuring the uninsured of California sounds like a viable option when compared alongside the programs in the United States that already exist to insure people. CalPrime acts much like Medicaid does, basing eligibility on income level; it is another program to insure a select group of people, much has been the tactic of the United States government to insure people in the past. SCHIP, for example, targets children in an attempt to cover all of them. The problem is that CalPrime should be attempting to cover all those currently uninsured, but it only covers a select group, leaving many to fend for themselves, possibly worse off if the proposal comes into effect, because they must find private insurance. "Of those above the 300% FPL, 62% (682,000) would be forced to buy private coverage," which may not be possible for them, since they did not have coverage before the mandate (Halvorson w84).

However, while its ideas are slightly incomplete, as can be seen from those left to find their own private insurance, Halvorson's proposal for California does give a glimmer of hope for the future of universal heath care. It is interesting to note that the proposal was written by Kaiser Permanente executives, and its practices would directly affect Kaiser's insurance rates (Curtis w92). This means that insuring the uninsured is beneficial to everyone (government, insurance companies); otherwise, Kaiser would not support such a proposal.

Despite flaws in the philosophical ideas of creating a "Medicaid clone," the proposal lacks a viable method of supporting all of the required programs and policies financially. The proposed methods for funding CalPrime include a "partial extension of the current statewide California sales tax to include heath care services" and "an in-lieu payroll tax paid by employers who do not offer coverage for their employees" (Halvorson w88). This presents a problem in the creation of CalPrime, because health care legislation is not easily passed because of the huge amount of money that the United States spends on health care. If federal or state governments have not passed laws to insure the uninsured already, they will certainty not do so if it costs the country much more that it is already spending. Another problem specific to California and this proposal is that it would be very difficult to pass any kind of health care tax. Proposition 98 of the California Constitution, passed by voters in 1988, prohibits any new revenue source for health coverage for the uninsured without a new amendment to the state constitution (California). Overall, Halvorson's proposal is not only expensive, but there is almost no possibility of obtaining the funding necessary for CalPrime, a veritable Medicaid knockoff.

The proposal leaves those who are not eligible for CalPrime out in the cold, mandating most of them to seek out private insurance. There is a major flaw in this ideology, as best put by a critic of Halvorson's proposal:

Where a state requires individuals to have coverage, the state also needs to assure easy, convenient access to health insurance that does not cost more for people with health conditions, just as employers cannot charge their workers more for employment-based health coverage based on the individual's health status. Under the proposal, nonsubsidized people with health problems and without employer coverage would generally have to pay more than standard-risk people. (Curtis w93)

This defeats the purpose of insuring the uninsured. The uninsured are poor as a group, and they can surely not afford more expensive care when they are sick. Halvorson's proposal is not well thought out, shown by the lack of viable funding, as well as the lack of consideration of the entire uninsured population.

The Cost of Uncompensated Care

Halvorson's approach to insuring the uninsured has thus far not been put into practice. However, the United States has been creating health coverage plans and tweaking their membership groups for the past fifty years, and still has a huge group of uninsured citizens. This is not the best way to insure the uninsured. We need to work with what we have; the most viable financial options (those that do not require more money or taxes levied to fund themselves) must be determined by what money already exists in the health care system and can be moved around. This translates into investigating what costs would be alleviated by insuring the uninsured and then estimating if these saved costs can be funneled into actually insuring those without coverage. This is done by looking at "uncompensated care," which is defined as "the medical care the uninsured received but do not pay for fully themselves" (Hadley 81).

Halvorson's proposal does not focus on money already in the health care system that can be redirected to insure the uninsured, something that is required of a more appropriate plan. The cost of uncompensated care (money already being spent on the uninsured) can be estimated from the Medical Expenditure Panel Survey (MEPS), taken in households, and provider-based data such as government budgets and agency reports (Hadley 67). According to MEPS figures, $98.9 billion in care was spent on those in the United States uninsured for part of the year, and $34.5 billion of that was uncompensated care; it was not paid for by private or public insurance sources or out-of-pocket sources; this is 35% of care received by the part-year uninsured (Hadley 70). However, uncompensated care counted for a much more substantial 60% of care received by the full-year uninsured. In 2001, the federal government spent $35 billion on uncompensated care (Hadley 72). Where does this money come from? According to assessments of MEPS data, it comes from Veterans Affairs (VA):

...The VA (Veterans Affairs) is the largest single source of funding, although these public sources exclude tax appropriations, government grants, and Medicare and Medicaid payments to private hospitals and clinics for care of the uninsured. (Hadley 70)

In order to create a method of insuring the uninsured, it can be said that this same $35 billion already exists in out health care system to do so. Ideally, by insuring the uninsured, we transfer the money spent on emergency care and safety-nets to primary and preventative care. 2.8% of total personal spending on health care was spent on the uninsured in 2001 (Hadley 78). Where Halvorson's proposal fails in lack of viable funding options, the Healthy San Francisco program excels. It harnesses the money spent on uncompensated care and searches for the break-even point; its goal is to transfer the money being spent on the uninsured in emergency rooms and to transfer it to preventative and primary care for the uninsured.

Healthy San Francisco

In April of 2007, a new program began in San Francisco, the likes of which the United States has not seen before. The city of San Francisco instituted a plan to provide health care for all of its uninsured residents, meaning that the entire city would have access to health care. The program is called Healthy San Francisco, and while it provides health care, it is not health insurance, partially because it does not cover residents once they leave the city. Administered by the San Francisco Department of Public Health (DPH), the innovative program focuses on preventative care and care for more serious medical situations. In its mission statement, Health San Francisco boasts:

...A primary medical home to participants, allowing a greater focus on preventive care, as well as a specialty care, urgent and emergency care, mental health care, substance abuse services, laboratory, inpatient hospitalization, radiology, and pharmaceuticals. (About Us, Healthy San Francisco)

Why is Healthy San Francisco a more feasible program than Halvorson's proposal for California? Without examining the underlying principles of the two, the environments in which the two programs propose to operate are vastly different. Halvorson's proposal takes more broad view of universal health care, attempting to insure all uninsured in an entire state, containing 10% of America's uninsured. Conversely, Health San Francisco is perhaps is a more realistic first step towards the ultimate goal of a statewide program. San Francisco is well equipped to deal with a program like this; it has a unified city government allowing legislation to be passed more easily, a compact geography, a relatively small number of uninsured adults, and a large network of public and community clinics through which care can be administered (Sack).

Within two years, Health San Francisco hopes to provide care for the 82,000 uninsured adults in the city (About Us, Healthy San Francisco); San Francisco has approximately 744,000 residents, meaning the program would cover 11% of the city's population (Population Finder, U.S. Census Bureau). As of November 1, 2007, there were approximately 4,000 San Franciscans covered by Health San Francisco (Program Stats, Healthy San Francisco). Unlike Halvorson's proposal, Healthy San Francisco does not require any additional taxes to operate. The new program sounds better than many current state-run health care programs, boasting primary care, dental exams, mental health and substance abuse services, hospitalization, radiology and prescription drugs (Sack). Each participant in the program is assigned a neighborhood clinic and a primary care physician who encourages regular check-ups and other forms of preventative care such as blood pressure checks and mammograms (Sack). Enrollment is not based on income level or immigration status; being uninsured for 90 days is the only eligibility factor. This program sounds too good to be true, and it almost is; estimated to cost $200 million the first year (2007-2008), it will be financed without a tax increase. Additionally, one of the best aspects of Health San Francisco is that because it does not count as insurance, enrollees "remain eligible for state and federal benefits, like discounts on AIDS drugs" (Sack).

Medicare Knockoff vs. A New Health Care Standard

In order to improve the statues of health care in this country, the United States need to find a way to insure its 43.6 million uninsured. As is, "every study on the topic of uninsured receiving poor access to care shows that outcomes are inferior for uninsured patients" (Grumbach 2115). If the United States is going to undertake this endeavor, financing is one of the most important issues to take into account. Halvorson's proposal for California creates CalPrime, which greatly resembles Medicaid in that eligibility is dependent on income level; it accepts members who are below the 300% FPL. However, the proposal also requires all residents of California to be insured. This leaves those unable to apply for CalPrime to enroll in CalCAT or find other private insurance, forcing extra costs on the uninsured. Additionally, taxes would be required to support the two new programs. Due to a striking resemblance to existing government health care plans, the proposal is sure to contain all the problems that exist in programs like Medicaid.

Healthy San Francisco is a revolutionary, self-sufficient social service that may pave the way to insuring all of this country's uninsured citizens. Its methods of financing are astute, finding money already in the system to fund itself. The more people are insured, the more money available for the program. Additionally, the program is revolutionary because it provides health care but is not considered insurance. San Francisco has done something amazing by taking the big business out of one of the biggest industries in the United States. By offering healthcare based in prevention and primary care, in which service is personalized by assigned doctors and clinics, Healthy San Francisco provides a social service, offering health care up as a natural right. This has been the dream of many proponents for universal care for a long time.

Healthy San Francisco is refreshing in its diversion from the trend in health care toward consumer directed health plans. In an effort to minimize cost in our health care system, new insurance plans tend toward placing fiscal responsibility in the hands of the patients. However, Healthy San Francisco takes away many of the financial factors involved in health care, stripping it down to what it should be: just health care. Hopefully the success of this program will mean the transition of health care to the social service it was meant to be, as opposed to the profit-reaping business it has become.

Works Cited

"About Us." Healthy San Francisco. 2007. Department of Public Health. 26 Nov. 2007 .

Bodenheimer, Thomas S., and Kevin Grumbach. Understanding Health Policy: Clinical Approach. New York: Lange Medical Books/McGraw-Hill, 2005.

California. Proposition 98: Classroom Instructional Improvement and Accountability Act. Article XVI, California Constitution

Curtis, Rick, and Ed Neuschler. "Insuring Californias: a Proposal That Matter." Health Affairs (2006): w92-w95.

Grosse-Tebbe, Susanne, and Josep Firgueras. "Snapshots of Health Systems." World Health Organization (2004).

Grumbach, Kevin. "Insuring the Uninsured: Time to End the Aura of Invisibility." The Journal of the American Medical Association 284.16 (2000): 2114-2116.

Hadley, Jack, and John Holahan. "How Much Medical Care Do the Uninsured Use, and Who Pays for It?" Health Affairs W3 (2003): 66-81.

Halvorson, George C., Francis J. Crosson, and Steve Zatkin. "A Proposal to Cover the Uninsured in California." Health Affairs (2006): w80-w91.

"Population Finder." American FactFinder. 2006. U.S. Census Bureau. 26 Nov. 2007 .

"Program Stats." Healthy San Francisco. 1 Nov. 2007. Department of Public Health. 26 Nov. 2007 .

Sack, Kevin. "San Francisco to Offer Care for Uninsured Adults." New York Times 14 Sept. 2007. .