The Search For “Affordable” Healthcare

For the majority of the 8,965 residents of Montecito, the cost of healthcare is affordable. Until it is not. Healthcare becomes less affordable, even for affluent residents, when they face the cost of chronic conditions like cancer, when they are forced to finance end-of-life care, when very expensive drugs are prescribed, or when unexpected medical expenses drain their quality of life as well as their pocketbook.

Nearly a third of Montecito residents are 65 or older, qualifying them for the financial security of Medicare or Medicare Advantage. Another large percentage can afford popular concierge doctors like the renowned and respected Dr. Babji Mesipam, who has been serving Montecito patients for the last 24 years.

Dr. Mesipam and other independent doctors have stopped accepting Medicare for payment, citing excessive government paperwork and regulations punishing the margins of single practitioners. Others in Montecito rely on fee-for-service insurance policies to pay for outstanding care from the Cottage Health System, Sansum Clinic, and the Ridley Tree Cancer Center. So, what’s the healthcare affordability problem?

Health Care “Too Expensive”

Middle class households have been hit with soaring insurance premiums and mounting healthcare deductibles. Small businesses with 50 or fewer employees are stymied in their efforts to provide employee insurance plans because they lack access to larger pools of workers. Self-employed and middle-income workers ask, “What good is an insurance plan that costs between $10,000 and $20,000 per year in premiums, but only kicks into covering claims after a $5,000 to $10,000 deductible?” The poor get government paid subsidies for coverage, but those earning $50,000 or more are stuck with the punishing costs of rising premiums and soaring deductibles.

Those without insurance, but with serious illnesses, skip care. Unexpected medical bills frighten all those who are not among the healthier and wealthier Americans. Back in 2006, half of workers employed by U.S. private companies enjoyed company-paid medical plans with no deductibles. Now four out of 10 private sector workers have a deductible of $1,500 or more. Deductibles, co-pays, and rising premiums for non-government workers are a growing concern. Healthcare costs are poised to be the number one issue in the 2020 presidential election. 

Funding U.S. Healthcare

The American system of healthcare coverage is a mixture of public and private insurance. Medicare provides insurance coverage for approximately 52 million Americans over 65 and eight million younger disabled patients. Medicaid offers 62 million lower-income persons subsidized healthcare. The Veteran’s Administration provides care for nine million qualified war vets.

There are 22.5 million civilian government employees at the federal, state, county, and district levels, including teachers, university employees, and public service union employees. Most receive generous taxpayer-subsidized lifetime healthcare benefits. 178 million U.S. workers employed by private industry and small businesses receive subsidized health insurance through their employers. Few private businesses can afford such generous healthcare benefits as the stingiest government entity, a gap that continues to grow.

Last year, only 8.4 million Americans enrolled in ObamaCare during open enrollments in 2018, down from 11.8 million during open enrollment in 2017 and the 12.7 million enrolled in the 2016 marketplace. An improving U.S. economy with lower unemployment and the cancellation of the ObamaCare requirement that every American has to purchase health insurance or pay a penalty, has reduced the ObamaCare rolls.

An analysis from U.S. federal government actuaries estimates that in total Americans spent a whopping $3.65 trillion on health care in 2018, or $10,800 per person per year, according to a report from Axios. That amount is larger than the entire GDPs of such countries as Brazil, the U.K., Mexico, Spain, and Canada.

Santa Barbara Neighborhood Clinics (SBNC)

The best kept health care secret in Montecito is the existence of the Santa Barbara Neighborhood Clinics under the direction of Dr. Charles Fenzi, Chief Executive and Chief Medical Officer. SBNC offers high-quality medical, dental, and behavioral healthcare to the south coast communities of Santa Barbara County, regardless of the patients’ ability to pay. Eight strategically-placed clinics in Goleta, Isla Vista, Westside, Eastside, the Bridge Clinic, and an Integrated Care Clinic, plus Goleta Dental and Eastside Dental, offer quality care at an affordable price, targeted to the underserved and uninsured, but available to everyone.

Twenty-five percent of the Neighborhood Clinics’ 21,325 patients have no healthcare insurance. 30% of patients are children. 81% of patients are under the poverty level. 73% of patients are racial and ethnic minorities of which 63% are Hispanic/Latino. 67% of insurance coverage comes from Medicare, Medi-Cal or Medi-Cal Managed Care; 28% of patients are self-pay at whatever level they can afford. Over 80% of Medi-Cal beneficiaries are enrolled in a managed care plan which means that they receive most of their health care from a managed care plan rather than a fee-for-service plan.

Services provided include family medicine, internal medicine, pediatrics, reproductive health, preventive care, immunizations, diabetic screening, behavioral health to treat the whole person, pulmonary disease, psychotherapy, drug and alcohol counseling, parenting, crisis intervention and dentistry, including cleanings, bridges and crowns, root canals, implant services, partial and complete dentures and cosmetic work.

SBNC has established more than 100 collaborations with local, state, and national partners. Cottage Hospital provides capital and operating grants, valued at $1 million per year. Sansum Clinic provides free EKGs, imaging and other diagnostic services for patients without insurance, valued at $300,000 per year. Direct Relief provides insulin and other refrigerated drugs to SBNC at no charge, valued at $800,000 per year. NYU Langone Medical Clinic fully pays seven dental residents, valued at $500,000 per year.

SB Foodbank, Sansum Diabetes, New Beginnings, Ridley-Tree Cancer Center, CALM, CADA, Visiting Nurses & Hospice, UC Berkeley Optometry and many others open their services to SBNC. Strategic partnerships and cost efficiencies add value. 86% of all Neighborhood Clinic revenues go to patient services. Volunteer philanthropy plays a large role. The Cecilia Fund covers the treatment of children with no dental insurance. Clinical and staff work performed by volunteers amounts to $188,000 per year. Medical and dental equipment is provided at no-cost or low-cost by medical suppliers.

Four-Star Delivery

Charity Navigator, the best independent charity rating evaluator, has given Santa Barbara Neighborhood Clinics their highest 4-star rating for each of the last four years. Part of the reason is that normal visits and procedures are delivered to the most vulnerable in our community at a cost ranging from 10 to 35% less than market prices. The eight Neighborhood Clinics serve as an affordable alternative to the much more expensive Cottage Hospital emergency room visits. 90% of all emergency room visits made by adults under the age of 65 result in treatment and release on the same day; only 10% result in admission to the hospital. Every patient seen by a SBNC doctor saves a possible visit to the Cottage Hospital’s emergency room, at substantial savings to the community and to Cottage Health.

For the 2016-17 tax year, Santa Barbara Neighborhood Clinics reported total revenues of $14.8 million and total expenses of $14.4 million to serve 21,325 patients, or $670 per patient per year, or $2,671 per family of four per year. This is limited, but very inexpensive healthcare. Compare that to unsubsidized ObamaCare insurance which costs a family of four roughly $1,000 per month in premiums ($12,000 per year) for healthcare coverage with a $5,000 deductible. ObamaCare, however, does include hospitalization and a wider range of services.

The Santa Barbara Neighborhood Clinics deliver front-line healthcare, not insurance services. Neighborhood Clinics deliver actual health care regardless of the patient’s ability to pay. They offer good health outcomes, not subsidized insurance. They deserve greater city, county, state and federal funding on some kind of a matching basis. 

Expanding What Works

The not-for-profit Santa Barbara Neighborhood Clinic model works so well as a low-cost healthcare provider that it needs to be expanded and duplicated throughout California and across the nation. This program has a proven track record of providing affordable and quality healthcare to the underserved, a problem government has been trying to fix for the last six decades.

Santa Barbara Neighborhood Clinics are non-profit. Funding for the Neighborhood Clinics is a composite of Medi-Cal and Medicaid reimbursements (59%); local philanthropy (19%); out-of-pocket patient payments for those with no insurance (9%); and private insurance (4%). SBNC and its collaborators are currently conducting a capital campaign to raise an additional $20 million from private philanthropists to fund the construction of a new Westside Clinic and to provide additional healthcare services.

The simplicity of the Santa Barbara Neighborhood Clinics is that they develop consumer-centered approaches to make basic healthcare, available and affordable, regardless of income, or health status, or pre-existing conditions without saddling the healthy with unaffordable premiums. That’s a benefit everyone in Montecito can understand.