Problem
of Lost Health Benefits Is Reaching Into the Middle Class
By JOHN M. BRODER
http://www.nytimes.com/2002/11/25/national/25INSU.html
 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.
Problem
of Lost Health Benefits Is Reaching Into the Middle Class
"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."
Problem
of Lost Health Benefits Is Reaching Into the Middle Class
"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."
Problem
of Lost Health Benefits Is Reaching Into the Middle Class
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
Problem
of Lost Health Benefits Is Reaching Into the Middle Class
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."
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