[A-List] US legitimation crisis: health care

[Michael Keaney]

Problem of Lost Health Benefits Is Reaching Into the Middle Class

November 25, 2002
By JOHN M. BRODER
New York Times

This article was reported by John M. Broder, Robert Pear
and Milt Freudenheim and was written by Mr. Broder.

Diane MacPherson, of Lowell, Mass., lost her job at a
relocation management company last November, and with it
the health insurance for herself, her husband and their
4-year-old daughter. Her husband works in construction and
does not have access to health care coverage at work.

Continuing her family health insurance under the federal
Cobra program would have cost $931 a month, so the couple
decided to insure only their daughter, at a cost of $270 a
month. Two months ago, when Ms. MacPherson's unemployment
compensation payments ran out, they dropped their health
insurance altogether. Although her husband earns about
$75,000 a year, construction work is seasonal and they
could not be assured of enough income every month to pay
for health insurance.

Then their daughter came down with strep throat. "That was
rather humiliating, being in the doctor's office without
insurance," Ms. MacPherson said. "You become very obvious
to everyone."

The family represents a changing portrait of the 41 million
Americans who do not have health insurance today. Once
thought to be a problem chiefly of the poor and the
unemployed, the health care crisis is spreading up the
income ladder and deep into the ranks of those with
full-time jobs.

According to recently released Census Bureau figures, 1.4
million Americans lost their health insurance last year, an
increase largely attributed to the economic slowdown and
resulting rise in unemployment. The largest group of the
newly uninsured - some 800,000 people - had incomes in
excess of $75,000. They either lost their jobs, or were
priced out of the health care market by rapidly rising
insurance premiums, or, like Ms. MacPherson, both.

While it is true that the number of uninsured people rises
when unemployment goes up, it is also true that the rolls
of the uninsured can expand even when joblessness is going
down, as it did through most of the 1990's.

The numbers of uninsured during the last recession from
1990-92 jumped to 35.4 million from 32.9 million. But the
number continued to rise even in the boom years of the mid-
to late 1990's, reaching 40.7 million in 1998 before
dipping slightly in 1999 and 2000.

Labor economists say that much of the job growth during the
expansion of the 1990's came in small businesses and in
service industries, low-wage, nonunion sectors that are
much less likely to offer health insurance as a benefit to
new workers. There was also a demographic bulge of young
people and recent immigrants entering the work force during
the decade, with many of them willing to take jobs that did
not offer rich benefit packages.

The problem has long been acute among minorities,
immigrants, part-time workers and employees in low-wage
service jobs. What is different this time, analysts say, is
that the problem is hitting middle-income and upper-income
families harder because many of the job losses are in
high-wage industries like technology and
telecommunications.

Thirty million Americans in working families today - 16
percent of all those in families headed by a worker - lack
health care coverage, according to a four-year tracking
study by the Center for Studying Health System Change, a
nonprofit research group financed by the Robert Wood
Johnson Foundation. An additional 16 million Americans -
mostly low-income workers - are offered health insurance
through their jobs but decline because they get health care
from government programs or it is too expensive, the study
found.

"The failure of the economic boom to expand employer-based
coverage for working families significantly is ominous,"
the center said in a recent study. It found that the
current slowdown and the rising cost of providing health
care to employees produced a double whammy: fewer companies
are now willing to offer their workers health care
coverage, and those that do will demand that employees
shoulder a far higher share of the cost.

Rising Concerns


Policy makers and health care analysts say the United
States is again confronting a crisis in its medical
delivery system.

"The number of uninsured will continue to grow as long as
health insurance premiums rise more rapidly than earnings,
as they have for a decade," said Drew E. Altman, president
of the Henry J. Kaiser Family Foundation, which tracks
health coverage trends.

"Losing health benefits is becoming a middle-class issue,"
Mr. Altman said. "If it had not been for expansions in the
child health program and Medicaid, we would have 10 million
more uninsured."

The growing number of uninsured and the rising cost of
health insurance have stimulated Congressional interest on
a scale not seen since 1993 and 1994, when President Bill
Clinton tried to remake the health care system and
guarantee coverage for all Americans.

The major proposals being debated now fall into two main
categories. One approach, favored by Republicans and some
Democrats, would provide tax breaks to help individuals,
families and small businesses buy health insurance in the
open market. The other, preferred by many Democrats, would
expand eligibility for Medicaid or the Children's Health
Insurance Program to include the parents of some children
who are already eligible.

Either plan could have eased the situation of Brian and
Anna Brooks, who run a small electrical contracting
business in Westminster, Colo. They gave up their health
insurance for themselves and their 8-year-old daughter this
year to keep their business afloat.

They had already let go four of their five workers and
wanted to maintain health coverage for their remaining
employee.

Ms. Brooks said that they dropped their health coverage in
July after the family premium jumped to $989 a month from
$489 a month. Business was slow, and their previous income
of more than $60,000 a year had fallen by half.

The effect has been immediate. Mr. Brooks, 50, has stopped
taking Lipitor to control high cholesterol and has started
taking over-the-counter herbal supplements. Ms. Brooks no
longer takes Singulair for asthma and has adopted an
exercise program intended to regulate her breathing. Ms.
Brooks estimates they are saving $150 a month by not using
prescription drugs.

"We changed our diets a lot in order to help the
effectiveness of the supplements, and maybe that's a good
thing," she said. They are setting aside $30 a month for
their daughter's medical needs, but one ear infection would
quickly empty the pot.

The federal Cobra program, enacted as part of the
Consolidated Omnibus Budget Reconciliation Act of 1986, is
devised to provide a cushion for those who have recently
lost their jobs. It allows workers to maintain their health
care coverage for up to 18 months if they assume the full
cost of the health coverage provided by their former
employer. But many find the cost prohibitive, and only a
quarter of workers say they would keep up their coverage
under Cobra because of its high cost, according to a new
survey from the Commonwealth Fund, a private research
group.

Betting on Good Health

The high cost of Cobra coverage presents many people who
have recently been laid off with a cruel choice. Audrey
Robar of Milwaukee, 63, who lost her job at a private
social services agency in September, decided to skip the
$300 a month Cobra package in the expectation that she
would soon find another job.

It was a gamble, and she lost.

"She was thinking she
could get away with it," her daughter, Eva Robar-Orlich,
said in an interview last week.

In the early hours of Oct. 23, Ms. Robar began to suffer
chest pain and dizziness. She called her sister to ask
whether she could seek medical care immediately and sign up
for Cobra later. Her sister, Alden Egan, urged her to call
an ambulance right away, but Ms. Robar set down the phone
to look for the Cobra documents. Ms. Egan then heard over
the open phone line the sound of her sister falling to the
floor and quickly called 911. By the time paramedics
arrived a few minutes later, Ms. Robar was dead of a heart
attack.

"I think the fact that she hadn't paid for Cobra very well
could have cost her her life," said Ms. Robar-Orlich. "She
deliberated over calling an ambulance at a time when every
minute was urgent."

Because the insurance crisis has hit high-income families
and millions of middle-class Americans with jobs, advocates
for the uninsured have expressed hope that Washington will
finally resolve the problem. High-wage workers and
small-business owners are a much more effective lobbying
force than the unemployed, children and the poor.

Mary R. Grealy, president of the Healthcare Leadership
Council, an industry coalition seeking coverage for the
uninsured, said: "We are very optimistic. More and more
people say that the uninsured will be a big issue in the
next Congress."

"Lawmakers have seen the new face of the uninsured - it's
not a welfare population - and will seek solutions for the
employed uninsured," the many working families who lack
insurance, Ms. Grealy said. "This is now an issue for
Republicans," she added. "It's not just a one-party issue."


Ronald F. Pollack, executive director of Families USA, a
consumer group, said that Republicans and Democrats could
agree on proposals combining tax credits with some
expansion of Medicaid and the Children's Health Insurance
Program.

On the other hand, proposals to aid the uninsured could
easily touch off a partisan brawl, in which lawmakers fight
over the merits of government programs versus the private
market.

President Bush has already proposed tax credits and is
expected to offer more proposals to help the uninsured as
part of his budget early next year.

In his first two budgets, Mr. Bush earmarked a large amount
of money for health insurance tax credits: $89 billion over
10 years, for people who are not covered by an employer's
plan and not eligible for public programs. The proposal
languished in Congress, but Mr. Bush will have a greater
incentive to push for action this year.

"The president wants to develop a record on health care to
neutralize this issue going into the 2004 elections," Mr.
Pollack said.

The issue is of particular concern to small-business
owners, who say they would like to offer their employees
health insurance but cannot keep up with the fast-rising
premiums. They are a large and influential lobby and an
important base for the Republican Party.

Martyn Hopper, the California state director for the
National Federation of Independent Business, said that 42
percent of the state organization's 37,000 member
businesses did not offer their employees health care
coverage. He blames rising premiums and the high cost of
doing business in California, which has imposed a number of
expensive mandates on employers. Big companies, Mr. Hopper
said, can move operations to cheaper locations or offshore,
but mom-and-pop businesses are forced to lay off workers or
make their employees pay an ever-increasing share of health
care costs.

Tom Lucas, who owns two plant nurseries outside Los
Angeles, said that he provided health coverage to his 70
employees until the mid-1990's, when the cost became
crushing. Mr. Lucas said that some of his workers have
spouses with jobs that provided insurance, some drove to
Mexico to seek cheap treatment and drugs, and some did
without.

He said that health coverage was particularly expensive in
California because the legislature had imposed a number of
mandates on the policies that employers must offer,
including coverage for mental illness, comprehensive cancer
screening, substance abuse treatment and weight loss
programs.

"Health insurance is a luxury I can't afford for my
people," he said. "It's a great perk, but in an industry
like my own, it's not reality. There's not enough dollars
to go around."

Roadblocks to a Solution

While there is continuing public concern about health care
and gathering sentiment in Washington to do something about
it, a number of constraints are limiting the likelihood
that the growth in the numbers of the uninsured will be
reversed any time soon.

Growing federal and state budget deficits will make it
difficult to find money to subsidize coverage for the
uninsured. The president and members of both parties have
promised prescription drug benefits to the elderly, who
vote in large numbers, and fulfilling that commitment is a
higher political priority for most lawmakers than
addressing the problem of the uninsured.

In addition, doctors, hospitals, nursing homes and other
health care providers are demanding higher Medicare
payments, which will eat up money that could be used to
cover people with no insurance. Medical providers are much
more effective lobbyists than are the uninsured.

A number of proposals on Capitol Hill would at least
incrementally address the problem. One, sponsored by
Senators Susan Collins, Republican of Maine, and Mary L.
Landrieu, Democrat of Louisiana, would provide tax credits
for the health insurance expenses of individuals, families
and small businesses; allow small businesses to take a tax
deduction for the full cost of their premiums; and allow
states to cover low-income parents and legal immigrants
under Medicaid and the Children's Health Insurance Program,
know as CHIP. The bill would also provide federal money to
the states to establish insurance purchasing cooperatives
for small businesses and high-risk pools for people who
cannot get insurance in the private market because of
chronic illnesses.

As Congress debates, however, employers and workers
continue to struggle with higher costs and more difficult
access to health care.

Mitch Flinchum, the controller at a highway paving company
in Burlington, N.C., sees the problems from both ends - as
an executive in charge of benefits and as a consumer.

Mr. Flinchum pays more than 10 percent of his $65,000
annual salary for health insurance for his family, but he
considers himself better off than most of his company's 350
workers. Only 119 of the employees accept the coverage, and
two-thirds of those pay only for themselves and not their
dependents. Mr. Flinchum says most of the workers who
decline insurance do so because the premiums are costly and
the coverage is so meager.

"When you look at your benefits, you've got massive
deductibles, massive co-pays, and unless you have a heart
attack or cancer, which would be devastating in itself,
it's like you don't have any insurance," he said.

"I don't know where it stops," Mr. Flinchum added. "With a
20 percent increase each year, over time the only two
people in this country who will be able to have health
insurance are Bill Gates and Warren Buffett. No one else
can afford it."