Pain All Around

For our next adventure in the American health care system we are going to look at a heated debate in San Francisco, one that nicely sums up the problems with the health care systems but fails to answer – really – the tough questions.
City Supervisor Tom Ammiano is demanding that that city businesses with 20 or more employees begin providing insurance for anyone who works more than 18.5 hours a week. It’s a political stake in the ground that Ammiano – who led the fight to have employers give spousal benefits to same-sex domestic partners – seems to intend as his political legacy.
But there are some practical politics at work here, too. To be sure there’s lots in the mix (Ammiano has enjoyed lots of support from the city’s unions, for instance), but it won’t have escaped the attention of the city’s more moderate politicians that one of San Francisco’s major liabilities is its general hospital. Like many cities, San Francisco is a health care provider. And SF General is located close to the poorer end of town. As we’ll see, that means – like urban hospitals across the country – it doesn’t enjoy the same clientele as say Sutter’s Cal Pacific hospital over in tony Pacific Heights. So getting employers to insure their employee isn’t just a feel-good idea that plays well politically; it’s a bottom-line issue as well. As we’ll see, If more low-wage earners showed up at SF General with health insurance their care would cost the city (and its taxpayers) much less.
But Ammiano’s proposal is a band-aid, not a solution. And while it’s political appeal – saving the city money – may well get his proposal adopted by even by business-minded moderates on the Board of Supervisiors, it’s not getting at some of the real problems with the health care system.

It’s not just uninsurance that’s the problem. Large numbers of Americans are significantly under-insured too. The under-insured tend to have either limited coverage for the first several thousand dollars of care, or have certain conditions excluded from their insurance, or in a small number of cases they have a policy but it doesn’t cover real catastrophes. Many university policies that cover students are like this–they often top out at less than a few hundred thousand dollars, which may not be enough if something goes badly wrong.

To remedy the number or uninsured and to make sure that they’re not just replaced by the highly under-insured, Ammiano’s proposal requires employers to spend as much as the city does – $345 monthly each – on insurance for employees. Not surprising, that element of the program is what has employers really up in arms and is the least likely to be written into law.

I explained last column why the presence of the uninsured allows the health care system to go on raising its prices willy-nilly, and how that hurts the rest of us. But today I’ll touch more on who gets directly hurt by uninsurance and how that relates to what’s being discussed here in San Francisco.

How many uninsured people are there? The number has actually been remarkably stable in the US over recent years. Employers have been dropping benefits coverage rapidly, Medicaid – that’s you the taxpayer – has made a valiant effort to pick up the slack by expanding coverage, especially for children. Don’t forget that we have a universal single payer system for the elderly called Medicare, so there are no uninsured older than 65. (That’s one reason we don’t have a universal insurance care system for the rest of us, but that’s a subject for another day).

What’s important is that the uninsured are not a stable bunch. Roughly 8% of Americans are hard-core uninsured, and have been that way for 2 years or more. The 45 million (or 16% number you hear often) is a snapshot. That’s the number of uninsured right now. But there are a hell of a lot more people cycling through that number; the best estimates are that over a two year period, some 80-90 million people will be without insurance for a brief – a few months – period. So effectively some 30% of American adults have experienced being uninsured.

Who are they? We have seen them and they’re us.

Kaiser Family Foundation has done a fantastic job quantifying the uninsured for years. 81% of them are working or are in a family that has at least someone working part-time. They are more likely to be poor and/or ethnic minorities, but there’s a sizable contingent from households who earn significantly more than poverty level incomes. Seven percent of those in households earning three times the Federal poverty level or more are uninsured — even if those of you paying mortgages in San Francisco may not realize that $60,000 a year is not a poverty level income!

More importantly, what’s the impact of uninsurance? Not surprisingly the uninsured get less access to care and have less money spent on their care than the rest of us (about 50% of the average).  And they are far more likely to skip recommended or necessary care, not be able to pay their medical bills, or not fill a needed prescription. And as you can imagine, given that prevention is better and cheaper than cure in virtually every sphere of life, this does come back to haunt them. The Institute of Medicine estimated that 18,000 deaths a year can be attributed to uninsurance. So skipping your medical insurance because you don’t remember being unhealthy is not such a great idea.

But there’s is another, less obvious, group that suffers from uninsurance. It’s health care providers. And as with everything else, in health care the distribution of hurt is not even. Providers who are geographically located in areas where there are more likely to be more poor and minorities – say, the Southern reaches of San Francisco near the Latino-heavy Mission and Excelsior neighborhood – are more likely to have the uninsured showing up on their doorsteps seeking help. So much so that there’s actually a Federal designation for hospitals like SF General which enjoy what the industry euphemistically terms a “poor payer-mix”. The designation is called “disproportionate share hospital” (known as DiSH) and like most Federal designations it comes with dollars attached, in this case via the Medicaid program. And most of these dollars go to the big inner-city hospitals and rural hospitals that you’d expect they’d end up at.

But of course there are not enough dollars to make up the difference. If you look at the profit margins of hospitals that receive DiSH money compared to those that cleverly chose to locate in affluent suburbs near patients with good insurance, you’d see that the safety-net hospitals barely scrape by while the rest make 3% margins in a bad year and 6-10% in a good one. (Don’t worry, those numbers get buried deep enough in the non-profit hospital accounting world so that no one notices). And hospitals in the suburbs – or nice neighborhoods like Pacific Heights – are on the mother of all building booms right now, so that they are ready for the time when the baby boomers hit Medicare in 2010.  Yes, unless you don’t intend paying taxes in the future, you’ll be paying for that too. 

There’s way more to this. But in summary Ammiano’s proposal is a doomed local attempt to fix something that just escaped reform at the state level last year and the national one in 1994. But that story will have to wait till next week. For now realize that uninsurance does actually matter in more ways than you’d might think. And ponder the realization that the type of person likely to be uninsured (young, poor, a minority) is also the type of person not likely to vote.

Editor’s note:This entry was written by Matthew Holt but, for technical reasons, posted by Spot-on editor Chris Nolan.