Patient cost initiative won’t lower bills, opponents say

Union-backed measure on ballot aims to restrict hospital profits to 15 percent above actual cost of care

A group fighting an initiative to restrict patient costs in Palo Alto claims that the measure would not lower hospital bills, but force the city to increase taxes or reduce services and even spur healthcare providers to relocate elsewhere.

C. Duane Dauner, director for the No on Measure F Coalition which is backed by local hospitals, said the initiative would not reduce costs to patients with pri- vate insurance or force insurers to issue rebates to patients who are charged too much for their care. The real reason the union is pushing the initiative is to boost membership, he said, adding that it will actually lead to hospital layoffs. "Who wins under this initia-tive?" Dauner said. "The answer is nobody." The Palo Alto Accountable and Affordable Health Care Initiative, or Measure F — sponsored by Ser-vices Employees International Union-United Healthcare Work-ers West (SEIU-UHW) — would limit the amount that Stanford Hospital, Palo Alto Medical Foun-dation and other health care pro-viders can charge patients to no more than 15 percent above the actual cost of providing care. The city would be required to regu-late, administer and enforce any fines against healthcare provid- ers, according to the city attor-ney. A similar measure is on the ballot in Livermore. If approved by a majority of voters, the ini-tiatives would take effect Jan. 1. Dauner said if the initiative is approved by voters in November, hospitals would begin operating at a loss and doctors might start moving their practices out of the city. This is because more than

60 percent of patients are on government programs like MediCal and Medicare, which are exempt from the initiative, he said. Hospitals make up the difference by charging patients with private insurers 50 percent more than the cost of their care, which would no lon- ger be allowed. He said the initiative also doesn’t factor in management costs, like administrative salaries and licensing fees, which are passed on to patients.

A statement against Measure F on the city’s website backed by Mayor Liz Kniss said the initiative would lead to hospital layoffs and shuttered healthcare facilities, which would sap city revenue and be “perhaps impossible” to replace. In addition, the statement reads, the cost to the city of regulating its hospitals would be in the millions of dollars a year.

“The city’s only options will be raising taxes, reducing city services such as police and fire protection, or laying off City employees,” the statement reads.

Steve Trossman, SEIUUHW publicist, said opponents are “fear mongering” and spreading disinforma- tion. He said the burden would be on healthcare providers, adding that the city officials would mostly monitor hospital audits already conducted each year by independent agencies.

“If the city has to spend some money to lower costs for healthcare, that seems like a worthwhile thing to do,” Trossman said.

Michael Borges, SEIUUHW’s assistant political director, said Affordable Care Act regulations already protect patients against paying insurers premiums more than 20 percent above the cost of care. The goal isn’t to police insurers, he said, but to reduce hospital profits— particularly Stanford.

“Stanford charges some of the highest rates in the state, even though their outcomes are not the highest,” Borges said. “If you can bring down the costs of the most expensive provider, it would bring the costs of other providers down.”