By Marie Cocco
Here is a number easily understood by even the math-phobic: Every 1 percent increase in the unemployment rate leads to another 1.1 million Americans becoming uninsured—and causes still another million more children and adults to become eligible for state health insurance coverage.
This means that over the past 10 months, as the hemorrhage of jobs began to push the national unemployment rate toward its October level of 6.5 percent, about 3 million Americans were thrown off the insurance rolls or had their incomes fall so much that they became eligible for Medicaid or the State Children’s Health Insurance Program.
These estimates by the Kaiser Commission on Medicaid and the Uninsured do not bewilder as much as do the tallies associated with the various federal bailouts and guarantees of banks and other institutions at the core of the financial crisis. Those are in the hundreds of billions—actually, we’re into the trillions when you count up each form of taxpayer backing—to shore up this or that part of the teetering financial system.
But before long, if unemployment climbs as predicted to 8 percent or 9 percent next year, the worsening economic crisis will deepen the health insurance crisis. And the combination of job losses and the loss of insurance that is inevitably connected to them is likely to be an awful lot like the crisis of the early 1990s—the last time the political system tried to fix the confused, costly and crumbling health insurance system.
The recession of the early ‘90s led the Clinton administration to attempt universal health care. Though the Clinton plan is consistently derided as a failure, in truth, President-elect Barack Obama’s campaign pledge to build a universal system based on the current, employer-based method of delivering insurance is in good measure modeled upon it. And that is the problem.
Look only to the Detroit automakers’ current economic straits for the reasons why. The car companies’ unionized workers still count on a model health insurance safety net—but even this has been scaled back repeatedly in successive contracts. Last year, the United Auto Workers Union and the Big Three entered into a deal to create a separate trust fund to bear the cost of retiree health benefits. The fund is jointly financed by the union and the companies, and a substantial part of the money is coming from current workers’ forgoing promised wage hikes.
Year after year, employers demand health benefit cuts in contract talks, or impose them unilaterally where there is no union. In a 2008 survey, the Kaiser Family Foundation found that 40 percent of firms that offer insurance said they are “somewhat likely” or “very likely” to increase the amount their workers contribute to insurance in the coming year, a cost shift that includes higher premiums and co-payments. Yet the average annual worker contribution toward premiums for a family policy already has more than doubled in the past nine years. During the same period, middle-class incomes have been largely stagnant.
With employers quickly shedding workers, is there any doubt that more health benefit cuts are coming for those lucky enough to keep their jobs? And when recovery comes, does anyone think American business is going to abandon its argument that health costs represent a competitive disadvantage in the global marketplace? They won’t, because it’s accurate. And that’s largely because other countries have universal, taxpayer-funded health care systems.
These are the immutable truths of the health care conundrum. They haven’t changed much in two decades. Costs are driven inexorably higher by continual advances in care as well as an aging population that needs more of it. Employers can’t cope unless they scale back coverage, shift costs to workers or eliminate benefits altogether. States have become insurers of last resort—but right now they face crippling budget shortfalls that threaten this safety net.
Using this compromised system as the basis for health insurance revision is folly—more so now than it was in the Clinton era, when more employers still were covering their workers. Tightening regulation of the insurance industry and creating a new, government-based plan to make coverage available to those who cannot afford to buy it from private insurers—the essence of Obama’s campaign proposal—would only add another layer of complexity and, eventually, cost. Only a single, government-financed system can eliminate the administrative waste, unfairness and economic burden of our current health insurance scheme.
Timidity is no longer an option.
Marie Cocco’s e-mail address is mariecocco(at)washpost.com.
© 2008, Washington Post Writers Group