Commentary: How To Cover America's Uninsured

When Tamie Sue Brush's 12-year-old son, Jacob, broke his leg in a bicycle spill in late June, she had to come up with a week's worth of her wages as a janitor to pay his emergency-room bill. She doesn't know where the money will come from to provide sorely needed dental care for her 8-year-old daughter, Jessie. And when Tamie Sue's husband, John, a disabled ranch hand, broke two fingers a month ago, he set his own bones rather than spend the family's meager cash. "I don't mind working for a living. I worked all my life," says the 41-year-old Larned (Kan.) woman. "But it gets really hard."

The Brushes, like more than 44 million other Americans who lack insurance, are a case study in the failure of the country's health system to provide for all. Even as the economy has soared and created a record number of jobs, more Americans than ever are going uninsured. And their ranks are likely to inch up further, experts predict (chart).

URGENT. Now, midway into an election year, with health-care issues front and center, the uninsured are once again an urgent item on the national agenda. Vice-President Al Gore has proposed a $157 billion effort over 10 years, including expanding a federal program that helps states subsidize children's coverage, and giving tax credits to small businesses to buy coverage for workers. Taking a less ambitious tack, Texas Governor George W. Bush has a program with a decade-long $135 billion price tag that would give tax credits to low-income families to buy insurance and would clear regulatory hurdles so trade groups could market coverage nationwide to small businesses.

Other groups have jumped into the fray, too, from the American Medical Assn. to labor unions to the insurance industry, which so vociferously opposed reform in 1994. Which solutions prevail won't be clear until November, at least. But there are virtues in all of them. And given the seeming intractability of the healthcare insurance crisis, the smartest thing policymakers can do is to borrow freely from every one and see which work. Whatever ideas do hold sway, it's clear that taxpayers are going to have to foot much of the bill--as they already do, since the law requires that uninsured patients receive publicly funded emergency-room treatment when needed.

Clearly, this stubborn societal ill won't succumb to market forces alone. The patchwork arrangement of public and private--principally employer-funded--approaches that forms our system simply falls short. Those who lack coverage either are unemployed, are too young or too ill to work, are self-employed, or work for outfits, often small businesses, that can't or won't provide health benefits. Even the tight labor market isn't compelling enough yet to force some reluctant employers to pony up. And too many such workers don't have enough other options.

To better-off Americans, who consider coverage a given, the figures are staggering. By one estimate, some 46% of the nation's small businesses don't offer plans. Often, they can't afford to, since they work on such narrow margins. What's more, in many companies, large and small, low-wage workers often can't shoulder the 27% average share of coverage costs their employers demand of them. That comes to an average $1,100 a year for premiums paid by U.S. workers, while employers pick up the remaining $4,100.

Indeed, the working poor and their families make up most of the uninsured. Between 74% and 84% of Americans without coverage come from families where one or more members work, according to estimates by the Henry J. Kaiser Family Foundation and the Alliance for Health Reform. Tamie Sue Brush falls into this category. A custodian at a psychiatric facility, Larned State Hospital, she brings home $469 after taxes every two weeks. She can afford coverage for herself, at $8 a month, but putting four children--15, 12, 8, and 3 months--on the policy would hike her bill to $180 a month. Her husband, who collects Social Security disability payments, has government coverage, too, but rarely can afford to pay his 20%-or-so share for many medical procedures.

When emergencies arise, the family makes do. With son Jacob's broken leg, for instance, doctors wanted to put on a walking cast. But to save money, Brush picked up a used plastic air cast at a secondhand store. Daughter Jessie probably won't get her needed $1,300 worth of dental work. Says Brush: "It's like, `Well, honey, put some clove oil on it and brush your teeth."'

Not that solid progress hasn't been made. The biggest step lately: State Children's Health Insurance Program (S-CHIP), enacted in 1997 and picking up steam nationwide. S-CHIP provides $40 billion in federal money to states that match funds to cover children whose families make too much for Medicaid but too little to afford private coverage.

Ambitious as it is, though, S-CHIP has disappointed policymakers. It insures only 2 million children so far, leaving 11 million--one-quarter of those uninsured--out in the cold. Sadly, many of the uncovered could qualify, but they don't apply, partly because their parents shun the stigma of a government program--a blot states have tried to erase with names such as Vermont's Dr. Dynasaur and Wisconsin's BadgerCare.

Often, ignorance is to blame. In New York, Mayor Rudolph Giuliani figures that existing federal, state, and local programs could cover as many as 500,000 of the city's 1.8 million uninsured, while a further 400,000 could be eligible when a new state health plan goes into effect in 2002. So he has set up a new office to publicize the programs through every city agency.

Action at local and state levels may prove the most potent remedy. Kansas has authorized creation of purchasing cooperatives to let small businesses band together to buy coverage. They're now thinking of using $2.3 billion from settlements of lawsuits against Big Tobacco to subsidize such insurance for low-wage workers.

FAULT LINES. Indeed, purchasing alliances are gaining favor as a way for small businesses to buy more cheaply. A growing number of leaders back association health plans (AHPs), alliances that would cross state lines. If AHPs came to pass, trade groups such as the U.S. Chamber of Commerce and the National Federation of Independent Business could market coverage nationwide. "A whole lot more people are going to have access to health insurance that way," argues Rep. James M. Talent (R-Mo.), who has shepherded an AHP bill through Congress. The bill, now part of negotiations between the Senate and the House on patients rights generally, deserves to sail into law.

Trouble is, AHPs define one of the fault lines between the candidates. Bush favors the idea, even if it means preempting state mandates to create national plans. For his part, Gore defends state mandates and state regulation, a stance that makes only statewide purchasing cooperatives practical. Gore's argument: State mandates require benefits that Washington shouldn't water down.

An AHP would probably help Richard G. Gallo, who has run the Office Outlet store in Indiana, Pa., for four years. Gallo, whose business only recently broke into the black, says he couldn't cover himself and his seven employees for less than $60,000 a year. "We have to pay vendors and employees, and there's not a lot left over to buy health-care insurance," says Gallo.

But even if such businesspeople get a leg up, AHPs likely won't be enough. Such plans could cut premium costs by a lot--maybe as much as 20%, Talent estimates--and yet they'll still leave a stiff bill for low-wage workers. So proposals are being floated to offer tax breaks. Bush, for instance, would create a tax credit of up to $2,000 to help modest-income people buy coverage. Gore suggests a 25% tax credit to businesses that buy coverage through purchasing coalitions, plus 25% credits for some Americans who buy coverage privately.

HARD-PRESSED. Such credits are politically appealing but aren't enough either. If a low-wage worker winds up buying coverage independently at, say, $5,000 a year, he'll still be hard-pressed to pay the $3,000 or so that Bush's credit wouldn't cover.

That's a lot even for the better-heeled. Roughly 2 million Americans who earn more than $50,000 a year--about 4.6% of workers overall--are without health coverage, according to the Employee Benefit Research Institute. Many are young and healthy and just don't bother with coverage--they opt to "go bare"--while others are self-employed and so can't get group coverage.

They're like Nancy J. Byrne, a 42-year-old single New Yorker, whose two-year-old events-planning business last year brought in about $60,000. Comfortable as that sum may sound, Byrne says there's just not much left over once she pays rent, taxes, and the high costs of urban life. So Byrne goes uncovered, paying out-of-pocket for care and wagering she won't get seriously hurt. "I was riding my bicycle in Central Park this morning and I thought, if you fall off this, basically you're in trouble," she says.

It's not easy to address needs as varied as Brush's, Gallo's, and Byrne's. That's why easy fixes have proven impossible for health care. Many of the changes advancing now--especially those directed at small business--will go far. State innovations certainly are promising, and S-CHIP may yet make a big dent. Still, government programs can't cover all cases. As pundits and politicians debate, more and more Americans go without coverage. Even while Washington and the states generate ideas, the crisis seems to be outrunning policymakers.

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