Palo Alto voters reject Measure F, which would have regulated healthcare costs

STORY UPDATED: Nov. 7, 10:23 a.m.

Palo Alto’s medical cost reduction ballot measure lost in a landslide vote against the initiative during Tuesday’s midterm elections.

Measure F, otherwise known as the Palo Alto Accountable and Affordable Health Care Initiative, would have prohibited healthcare providers from charging more than 15 percent above the cost of a medical service and force providers to offer rebates for surplus costs. The cost of services would be reviewed by city government if the measure passed.

The measure, created by Service Employees International Union-United Healthcare Workers West (SEIU-UHW), received a “no” from almost 80 percent of Palo Alto voters.

The measure might have been dismantled even if it passed on Tuesday, according to an impartial analysis published on Aug. 21 by the City Attorney.

“If Measure F passes and a legal challenge is filed, the outcome of such a lawsuit is uncertain,” wrote Palo Alto City Attorney Molly Stump.

Two healthcare providers targeted by the initiative, Stanford Health Care (SHC) and Sutter Health Palo Alto Medical Foundation (PAMF), brought the measure’s creator to court the summer prior to the election, contesting that Measure F was unconstitutional because it would require the city to regulate healthcare.

But Santa Clara County Superior Court Judge Mark Pierce disagreed with the healthcare providers, saying the initiative only required the city to examine costs, not service plans. The Aug. 1 court ruling ultimately allowed Measure F to appear on the ballot.

Still, Pierce said that the concerns presented by Stanford and PAMF remained true and could lead the measure to being “confiscated” if it was passed.

“Therefore, whether the initiative will be confiscatory as applied can be determined only after the election, assuming the measure is passed by voters and thereafter implemented by the city of Palo Alto,” Pierce wrote.

Although the extent of costs for regulation by the city is not clear, a similar initiative proposed by SEIU-UHW on Livermore’s November ballot, Measure U, was projected to cost Livermore $1.9 million annually, according to an analysis conducted by Henry W. Zaretsky and Associates. The same analysis found that the first year would cost the Livermore $2.8 million, with the addition of recruitment costs, software, equipment and consulting services.

Measure U did not pass on Tuesday either.

“To protect their enormous profits, Stanford Health Care and other healthcare corporations committed more than $5.3 million to defeat Measures F and U,” said Chuck Fonseca, a certified nursing assistant at Stanford University Medical Center and member of the SEIU-UHW. “That would be the equivalent of spending hundreds of millions on a statewide ballot measure. They did it to scare and mislead voters in Palo Alto and Livermore.”

Palo Alto City Council unanimously opposed Measure F, claiming that the city was ill-equipped to regulate healthcare costs.

“This is not something we normally do, it’s not something we are staffed to do and I think it would put a substantial burden on our city,” said Palo Alto Mayor Liz Kniss in a June city council meeting.

SEIU-UHW, a healthcare workers’ union with 1,800 members at Stanford University Medical Center, sponsored both measures as a way to cut the Bay Area’s high healthcare costs. The Bay Area’s medical fees are 30 percent higher on average than the rest of California, according to SEIU-UHW spokesperson Sean Wherley.

“It’s not really clear why that’s the case,” Wherley said. “Yes, the cost of living is expensive but it is in other parts of the state as well.”

In a debate about the measure hosted by the League of Women Voters of Palo Alto (LWVPA) on Oct. 7, former president and CEO of the California Hospitals Association and director of the No on Measure F Coalition Duane Dauner said the initiative would have prompted many private care specialists to leave the area.

“The cost of living is so high here and the quality of care is high and private care physicians aren’t tied to the area, they can get up and move,’’ Dauner said in the debate.

James Stephens, a dentist who has worked in Palo Alto for 36 years, told the city council in a Sept. 10 meeting that he would probably need to move to Mountain View to provide similar quality of care if the measure passed. Similarly, pediatric dentist Chris Lee said Measure F did not recognize the underlying costs of providing medical attention.

“Providing quality services is complicated, and dental billing isn’t as simple as drill, fill and bill,” Lee told the council, referring to instances where physicians need extra supplies or time to care for patients properly.

Dauner noted that SHC and PAMF cannot move. Instead, these providers would have had to lay off workers and reduce services. He added that most patients are covered by Medicare and Medi-Cal, meaning rebates would go to insurance providers and force healthcare providers to swallow costs.

Stanford University opposed Measure F on the grounds that the measure “would threaten Stanford Health Care’s ability to provide top-quality health care to patients from Palo Alto and across the region,” according to the statement published in Stanford News.

Still, SEIU-UHW member Chuck Fonseca said the union would continue working to cap healthcare costs.

“We set out to hold healthcare corporations accountable, and that’s exactly what we will continue to do,” Fonseca said. “We won’t stop until healthcare prices get under control in the Bay Area and across California.”


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