Got Health Insurance? You Don’t Know How Good You Got It

If you have health insurance provided by your employer, you can consider yourself among the lucky, because there are over eighty-five million Americans who went without insurance in the last two years. Workers used to be able to take for granted that health insurance coverage would come with a full time position, but that assumption is fading, as employers also attempt to cope with spiraling health care costs. Even those workers who still have health coverage are finding that it is costing them more: higher employee contributions, deductibles, and co-pays all net workers less coverage than ever before. Quite simply, workers who can are paying more and getting less. Workers who can’t pay must go without, with the devastating personal and societal consequences that can entail.

It used to be that if you got a new job, part of your consideration was how good the health benefits were. Now, the consideration is more likely to be whether the job comes with benefits at all. Over five million jobs that used to come with health insurance benefits prior to 2001 no longer carried such coverage in 2004: a decline from 64% to 61%. (See Washington Post article.) As more jobs are created in the service sector and by smaller businesses, it is unlikely that this trend will change.

For workers who have health insurance benefits, it is costing them more. According to a recent study by the nonpartisan health care watchdog group Families USA, health care costs have outpaced wages by a 3 to 1 ratio in the last four years. The cost of health insurance premiums rose by nearly 36 percent on average from 2000 to 2004 in 35 states, while average earnings rose just 12 percent over the same time. (See New York Times article.) For workers struggling to get by on wages that are barely keeping pace with inflation, you’re damned if you do and damned if you don’t. You cannot afford to be without insurance, if it’s made available to you, but you can’t afford to have it taking up such a significant portion of your take-home wages. The number of Americans who had total health costs that consumed more than one-quarter of their earnings rose from 11.6 million in 2000 to 14.3 million in 2004 — an increase of almost 23 percent. The overwhelming majority of these people (10.7 million) had health insurance. (See New York Times article.)

Who gets hit hardest by these trends? Of course, it’s the lowest-wage workers who can least afford adequate health care, but who make too much to be eligible for Medicaid. “The cost of family health insurance is rapidly approaching the gross earnings of a full-time minimum-wage worker,” says Drew Altman of Kaiser Family Foundation. Clearly, then, any family who is primarily supported by a full-time minimum wage worker is not going to have insurance coverage, especially considering that the kind of jobs that pay no more than the minimum wage are also unlikely to offer adequate health benefits. But the problem is not restricted to low wage workers. A recent Kaiser analysis of recent economic and insurance trends reported that

Most (three quarters) of the increase in the number of uninsured adults occurred among those below 200% of the federal poverty line. This occurred both because of a large growth in the number of low-income adults as well as an increase in the rate of uninsurance. This does not mean that the middleclass was not affected, rather many in the middle income range became part of the low-income population during this period.

(See The Economic Downturn and Changes in Health Insurance Coverage, 2000-2003.) Health coverage may very well represent the difference between being part of the middle class, or remaining one of the working poor. This phenomenon is not without a cost, however. The same Kaiser report shares the “real success story…the fact that children did not lose

health coverage.” But the explanation makes clear that taxpayers are instead picking up the tab: the decrease in children covered by family health coverage offered by employers was offset by an increase in the number of children eligible for enrollment in Medicaid and the State Children’s Health Insurance Program (SCHIP). Working adults without health coverage also often end up being treated in public hospitals, where their care is also subsidized by all taxpayers rather than their employers.

Both presidential candidates understand the importance of health care reform, and the need for solutions that enable more working adults to have adequate health care coverage. Their policy proposals are very different, however.

  • Sen. John Kerry would encourage employers to offer their workers health insurance by having the federal government reimburse them for 75 percent of the cost of their most expensive beneficiaries – those whose medical costs are $50,000 or more a year. He would also create a new Congressional Health Plan that would allow both individuals and businesses to buy US-subsidized coverage.
  • President Bush’s plan to help cover the currently uninsured revolves around tax credits. He proposes a new credit for low-income people of $1,000 – $3,000 for families – that could be used to help buy health policies on the open market. Bush also wants to expand Health Savings Accounts, which currently allow taxpayers who purchase high-deductible insurance plans to sock away cash tax-free, and later withdrawn to help pay their correspondingly high out-of-pocket healthcare costs. This expansion would occur in part by providing small businesses a tax credit of $200 per person ($500 for families) for HSA contributions.

(See Christian Science Monitor article.) It is clear that whoever is elected President next month will have to address the health care system, as health care coverage is not merely inadequate, but increasingly out of reach for a significant number of American workers. Voting may be the single most important thing that workers can do right now to immediately affect the quality of their own and their family’s future health care. So please be sure that you are registered to vote (time is running out in most states), and familiar with the candidates’ health care positions: it’s no exaggeration to say that it could be a matter of life or death.

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Madeline Messa

Madeline Messa is a 3L at Syracuse University College of Law. She graduated from Penn State with a degree in journalism. With her legal research and writing for Workplace Fairness, she strives to equip people with the information they need to be their own best advocate.