SPENCER MICHELS: Until recently, San Francisco, a diverse city with a population of nearly 800,000, had more than 60,000 adult residents with no health insurance. They were not poor enough for Medicaid, nor old enough for Medicare.
While the nation struggled with reforming health care, this city began a program of its own that so far has enrolled more than three-quarters of its uninsured. It's called Healthy San Francisco, and it is not, strictly speaking, health insurance. Rather, it's a way to provide health care, but only within the city limits.
The plan was not particularly radical. It used mostly existing resources, like city clinics and nonprofit hospitals, to supply and coordinate care. Instead of flitting from one clinic or emergency room to another, enrollees choose a medical home, one of 30 public or private health centers in the city, where they go for low- or no-cost health care.
WOMAN: So, do you work?
PHIL WOO, unemployed: No.
WOMAN: No? How do you support yourself?
PHIL WOO: I don't. I'm taking care of my mom.
SPENCER MICHELS: Phil Woo is a printing press operator in Colorado with insurance who left his job and his insurance and moved to San Francisco to take care of his aging mother.
PHIL WOO: At 59, I don't think you could find a job that quickly and to replace your health insurance.
SPENCER MICHELS: Woo, who has high cholesterol and hypertension, came to the Chinatown Public Health Center for care. And its director, Dr. Albert Yu, steered him into Healthy San Francisco.
DR. ALBERT YU, Chinatown Public Health Center: Now Phil knows this is his medical home. He actually cannot go to another health center to get care.
SPENCER MICHELS: If he needs hospitalization, you manage it from here?
DR. ALBERT YU: We coordinate the care with the specialist. We coordinate the care with the emergency room.
SPENCER MICHELS: Healthy San Francisco was proposed in 2006 by Mayor Gavin Newsom and approved by the city supervisors.
GAVIN NEWSOM: We're a public plan. We're that public option. And I don't think you noticed anything but the American flag on city hall when you came here. We didn't replace it with the Canadian flag. The sky didn't fall in. The world didn't come to an end.
SPENCER MICHELS: Newsom's plan is not exactly the public option debated in Congress. City Health Director Mitch Katz explains state law requires cities and counties to treat sick people, even without payment, even in tough economic times.
MITCH KATZ, director, San Francisco Health Department: Everywhere you go counties and cities are spending money taking care of the uninsured. And, certainly, we were. The problem with how we were doing it before was, there was no system.
The money exists. The money exists in Los Angeles, Sacramento, and Philadelphia, in New York.
GAVIN NEWSOM: We got rid of the middleman. We got rid of the payer, in this, the insurance companies and the overhead. We became the single payer, the public option, the public plan. So, no new bureaucracy was created. No new costs associated with the administration was actually born. So, the point is, this wasn't a hugely costly program.
WOMAN: Sorry. Does that hurt when I push?
WOMAN: A little.
WOMAN: OK. How about over here?
SPENCER MICHELS: Each patient in Healthy San Francisco costs the city about $300 per month. That's in line with insurance costs. It totals $126 million a year.
Depending on their income -- and most are below the poverty level -- enrollees pay nothing or from $20 a month up to about $200, plus co-payments. But that doesn't pay for it all. The city has mandated that businesses with 20 to 100 employees spend at least $1.23 an hour per worker for health care, and that larger companies pay more.
That money can be used to reimburse employees for health care costs, to buy them health insurance, or it can go to Healthy San Francisco.
GAVIN NEWSOM: We believe in shared responsibility, that we're all in this together, similar to the national debate. Right now, about 980, only, a small number of businesses, actually pay in directly to the system.
SPENCER MICHELS: But some of those businesses don't like the employer mandate. The Golden Gate Restaurant Association sued the city, claiming that forcing restaurants to pay high health costs, especially for workers who work as little as eight hours a week, violates federal law.
LAURIE THOMAS, restaurant owner: The concern of a lot of restaurants, me included, is, you know, you have got to keep the doors open.
SPENCER MICHELS: Laurie Thomas owns Rose Pistola restaurant and provides insurance for many of her employees. She has put a surcharge on the menu to pay for added health care costs.
Kevin Westlye, executive director of the restaurant association, claims that fast-increasing medical costs and coverage for part-time employees will boost restaurant spending far more than the city admits.
KEVIN WESTLYE, Executive Director, Golden Gate Restaurant Association: And the restaurant that used to spend $120,000 doing the right thing will be spending almost $440,000, which, by the way, is 24 percent of payroll, which is triple what we're looking at, at the national level. So, this is a real back-breaker for small business.
LAURIE THOMAS: The issue is not sharing the burden for San Francisco's uninsured. We're all for that. We have provided several different alternatives. My disappointment was that there seemed to be a pre-agreed-upon solution. And that was, we will essentially tax the employers.
SPENCER MICHELS: The Restaurant Association would prefer a national or a statewide health plan, rather than a local one.
Mayor Newsom, who owns seven restaurants himself, says Healthy San Francisco has not cost any jobs and is badly needed.
GAVIN NEWSOM: I'm very sensitive to the business concerns. At the same time, I do believe in shared responsibility.
SPENCER MICHELS: Newsom argues that uninsured residents waste money by using the city's very expensive emergency rooms, like this one at San Francisco General Hospital, for non-emergency care. Healthy San Francisco puts those people into a system that costs less and keeps track of them.
Susan Currin, CEO at San Francisco General, says emergency room use is slightly down, as patients get used to the new system.
SUSAN CURRIN: For many years, if they're used to going to an emergency department for their primary care, that's the first thing they will turn to. As they establish relationships with their medical home and their primary care providers, they will change their pattern of accessing health care.
SPENCER MICHELS: Healthy San Francisco patients can now make medical appointments in advance, and can use an urgent care facility with little notice. Many of the new enrollees have chosen the Family Health Center at San Francisco General as their medical home.
Dr. Hali Hammer is the director.
Dr. HALI HAMMER, Director, San Francisco General Hospital Family Health Center: We had to expand hours. We had to hire some new providers, so that we could see all these patients that we were expecting to come in. Everybody thinks a public health clinic is going to be just sort of a factory. And, so, we took sort of pride in proving them wrong.
WOMAN: Hi, good morning, Mr. Batte. How are you today?
SPENCER MICHELS: The Kaiser Family Foundation recently found that 94 percent of participants are satisfied with the program. The numbers of participants in Healthy San Francisco continues to grow, 700 or 700 a week, as more and more of the uninsured hear about the program.
WOMAN: Now, I understand this is not health insurance.
WOMAN: It's definitely not health insurance. It's just access to health services.
SPENCER MICHELS: The plan attracts more than just the poor. Twenty two-year-old art student Sally Ing signed up when her parents' insurance wouldn't cover her anymore.
WOMAN: So, right now, your fee is looking at $60 every three months.
SPENCER MICHELS: But even advocates admit the program has some problems. Only a few pharmacies handle Healthy San Francisco prescriptions. And here and at some clinics, the waits can be long. Some patients also complain that their payments are too high.
But Mayor Newsom is convinced Healthy San Francisco is a model the nation could learn from.
GAVIN NEWSOM: Studies show that we're providing quality health care at a substantially lower cost than people can provide health insurance, thus creating competition and lowering ultimate costs to the consumer and the user, as well as the taxpayer.
WOMAN: Thank you for calling Healthy San Francisco.
SPENCER MICHELS: Healthy San Francisco's future may be decided by the U.S. Supreme Court. In the Restaurant Association's lawsuit challenging mandatory employer contributions, the justices recently asked the Obama administration for its views before deciding whether to accept the case.