Problem of Lost Health Benefits Is Reaching Into the
Middle Class
Mon Nov 25, 9:02 AM ET
story.news.yahoo.com
By JOHN M. BRODER The 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 (news - web sites) 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
(news - web sites) 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 (news - web sites) 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." |
