A Local View of the Affordable Care Act

By now, the Affordable Care Act (ACA) is relatively old news. The first year of tax consequences has come and gone. Millions of previously uninsured individuals are reaping the coverage benefits. And, perhaps most importantly, the ACA managed to survive two high-profile legal challenges. But while the legislation may be settling at a national level, local governments continue to evolve, adapt, and reform, as they strive to provide and regulate health care in a post-ACA landscape.

Last summer, I witnessed some of these issues while interning with the Health Team of the San Francisco City Attorney’s Office. Surprisingly, the San Francisco City Attorney’s Office employs more lawyers than any other “traditional” San Francisco law office. Within the City Attorney’s Office, the Health Team serves and represents the S.F. Department of Public Health (SFDPH), which includes San Francisco General Hospital, the largest city department with thousands of employees. As both a California city and county, San Francisco carries a duty to care for the health and welfare of all residents, an obligation it largely discharges through SFDPH. In addition to operating an acute care hospital and regional trauma center, SFDPH provides homeless services, runs city clinics, and enforces environmental health laws, e.g., restaurant standards, hazardous materials, habitability standards. Implementing the ACA introduced new challenges. I will discuss three examples to highlight how health law touches many modern aspects of local government and health reform.

Managed Care

Prior to the passage of the ACA, counties relied on various sources of funding to care for low-income patients, including Medicare, other state and federal health care monies, and the city’s general fund. As a health care provider, SFDPH receives capitated health care payments to treat its patients and operates a “managed-care model” known as the S.F. Health Network to efficiently use Medicare and city dollars. This money has never covered all of the health care costs spent on indigent patients; supplemental state and federal grants help keep county hospitals open.

Now, the supplemental funds are diminishing as patients are expected to have insurance or coverage through expanded Medicare. This means that county hospitals must transition to operate more in a business capacity with economic self-sufficiency and must attract a diverse array of patients with private insurance. The city is therefore working to improve its managed-care model and specialty health care services. The new S.F. General Hospital will be a test ground for making public hospitals as competitive as private hospitals. New city contracts with third-party health insurance companies will further test whether this insurance revenue will adequately supplement Medicare funds.

Drug Pricing Discrimination

The ACA prohibits issuers from discriminating based on health conditions or disabilities. What this means for drug tiering and pricing is still unclear. In many states, insurers are placing HIV and chronic disease drugs in prohibitively expensive payment categories, often called “specialty drug tiers.” In these higher tiers, patients may have to pay 20 percent for prescriptions (which could mean up to $500 for an HIV treatment), instead of $50-$70 co-pays. The Department of Health and Human Services reiterated its position last year that benefit plans that place “most or all” drugs that are used to treat a specific condition in the highest cost tiers discriminate against those individuals with the chronic condition. At the state level, Covered California has amended its standard benefit plans to correct some of the issues with discriminatory pricing. In turn, S.F. is working to ensure that its contractors and affiliated insurance groups are not violating these ACA mandates.

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Photo Credit: Sabine Simons


Finally, the ACA encourages data sharing to improve outcomes and reduce costs through the widespread coordination of patient care. While most people want their relevant health data shared for these purposes, as with many fields, there is an ongoing tension between privacy and open technological access. The Health Insurance Portability and Accountability Act and state privacy laws present daily challenges for hospitals and public entities trying to navigate these concerns. Data breaches are common (in both the private and public sectors) and costly. New technology aims to reduce bureaucratic hassles without sacrificing security. The city continues to address what information can be shared and released for various reasons including improving continuity of care throughout the system of care, investigating public concerns, addressing county mental health services, and overall technological advancements in the hospitals. SL