Universal Health Plan Like San Francisco's Needed, Mayors Say

By Pete Winn | July 7, 2008 | 8:24 PM EDT

(CNSNews.com) - The nation's cities are increasingly picking up the tab for health care costs, and a group of big-city mayors wants the next president and Congress to make universal health-care reform a top priority.

"Ultimately, it really is (up to) the federal government (to lay) out a federally funded, universal, comprehensive health-care program for all Americans -- and for people who have a right to be here," Philadelphia Mayor Michael Nutter said during a telephone news conference call Monday.

The news conference was sponsored by Families USA, a health-care advocacy group that released a new study showing city budgets are increasingly strained in trying to meet increased demands for "safety net" health services.

"Our cities face the dual challenges of assisting a rising number of uninsured Americans and providing increasingly expensive health coverage for their own employees," said Ron Pollack, executive director of Families USA.

The group of mainly Democratic mayors said cities have been forced to rethink the whole issue of health-care reform and that America needs a national version of the program that San Francisco Mayor Gavin Newsom has implemented in the City by the Bay.

The program, called "Healthy San Francisco," provides health care for everyone in San Francisco, regardless of their ability to pay - or even if they are citizens.

"About 750,000 people every single week are enrolling in our program, regardless of preexisting conditions, and regardless, may I say, of immigration status, which has generated a lot of debate in our city," Newsom said.

But the controversial plan, which has been tied up in the federal courts since its inception in 2006, goes beyond requiring the city's clinics to provide a medical "home" and primary physician for each participant. It also requires all San Francisco businesses with at least 20 employees to spend a minimum amount on health care for their workers, either in insurance coverage or in payments to the city.

"It says, 'If you are going to do business with the city, you have to provide your employees health care,' it's as simple as that," Newsom told Cybercast News Service . "If you want to work with us, there are certain minimum responsibilities you have."

Newsom said the city would not have to provide the services if the costs of health care hadn't been shifted onto the cities, without helping to pay the costs.

"We shouldn't be doing this," Newsom added. "This is, I do believe, should be the responsibility of the state of California and the federal government. But in the absence to real solutions being advanced, we've had to step up - and step in."

Businesses in San Francisco, however, say the city doesn't have the right to require employers to subsidize health care because it is illegal to do so.

In 2006, the Golden Gate Restaurant Association, the trade group for San Francisco restaurants, filed suit to overturn the employer contribution provision. Other groups, including the National Federation of Independent Business and the U.S. Chamber of Commerce signed on, and the suit is still in the 9th Circuit Court of Appeal, which heard arguments in April.

Kevin Westlye, executive director of the Golden Gate Restaurant Association, told Cybercast News Service that his group supports health care for those who need it, but not a mandate on business, "which we feel is totally illegal, grossly overpriced, and completely unnecessary for the health plan."

Newsom said it is "unconscionable" for business not "to pay its fair share."

"The fact is, we're paying an enormous amount already, and we disguise it in fees, we disguise it in fines and in taxes," Newsom said. "Every city in the United States has found ways to pay for the costs on the back end. Everybody is paying the price, but they are paying four times more in the emergency room. The same businesses that are complaining about paying a modest upfront investment, are paying a huge price on the back end."

Michael Tanner, senior fellow in health policy at the libertarian Cato Institute, said there is no real evidence that the San Francisco plan actually works, and he believes Newsom is trying to implement a "no-pay, no-play" mandate.

"Basically, the proposal flunks economics 101," Tanner told Cybercast News Service . "It assumes that there is some entity called a 'business' that will pay the cost. But the reality is that employers are basically indifferent to how they provide compensation to workers. A worker costs an employer a certain amount of money, regardless of how that is divided up in terms of wages, or health insurance or taxes or retirement plans or free parking space, for that matter. It is all the cost of employing that worker."

"If you mandate that the employer provide health insurance, you are simply raising the cost of employing that worker, and an employer is going to compensate that in some other way," said Tanner. "They may provide lower wages to workers, by not giving them raises in the future. They may cut back on the number of workers. They may cut back on retirement benefits, or the amount of vacation they get."

Tanner said, however, that he thinks cities are right when they say they are getting short-shrift on money from the federal and state governments.

"There is something to that," Tanner said. "The fact is, there is a great deal of cost-shifting that goes on and, in many ways, local hospitals wind up getting hit for some of the cost of this care that is not being paid for elsewhere."

The biggest abuser is not the uninsured, Tanner said, nor is it businesses that don't provide health insurance.

"The biggest abuser is actually the federal government," he said. "The Medicaid program under-reimburses hospitals and health providers terrifically, and helps to drive people to the emergency room. The biggest cost-shifting of all takes place in government programs, not between the insured and the uninsured."

Medicare fails to fully compensate health care providers because the system wants it that way, Tanner said.

"It seems relatively easy to try to reduce costs - or at least say you're trying to reduce costs -- by squeezing down on providers," he said. "No one wants to make people pay for higher premiums, and no one wants to make taxpayers pay more, so you simply say we're going to cut out waste and simply squeeze down on providers."

The mayors group, meanwhile, said cities are also seeking significant increases in eligibility levels for Medicaid and the state Children's Health Insurance Program.

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