Middle-class Americans face life without health insurance

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The San Francisco Chronicle

The threat of losing health insurance increasingly became a problem of the middle class, not just the working poor, in 2004. Little relief is in sight in 2005, when the cost of medical treatment is projected once again to rise far faster than the overall inflation rate…

When the company where Helen Wilbur’s husband worked stopped offering health insurance in 2003, employees were told it was a temporary cost-saving measure. But a year and a half later, the Guerneville resident and her husband still find themselves without health coverage.

“I am a psychologist, and my husband is an engineer. We have worked hard through our entire adult life to do what we needed to do to achieve the dream of the American middle class, and we have been successful doing that,” said Wilbur, 51. “Right now, it’s all at risk because we’re betting neither one of us will get sick.”

With health insurance premiums rising at double-digit rates for the past four years, the threat of becoming uninsured is beginning to hit even the working middle class.

The percentage of people covered by their employers dropped to 60.4 percent in 2003 from 61.3 percent a year earlier, U.S. census data released this year showed. About 1.3 million fewer people were covered by company plans in 2003 compared with 2002.

About a third of the uninsured now live in households with incomes of more than $50,000 a year, according to the census data. The trend is expected to continue, as health care costs keep up their relentless rise.

“Early retirement, even divorce, as well as huge cost increases, are making being uninsured more common in California,” said Jerry Flanagan, health policy director for the Foundation for Taxpayer and Consumer Rights. “Even white-collar employers are making the choice: Am I going to pay the costs or cut down on insurance?”

Wilbur, who is self-employed, said she and her husband looked at buying insurance, but found the quoted rates of $650 to $800 a month too expensive.

“It’s not a choice,” she said. “To hedge our bets and ensure we’d be covered if we got sick would cost us so much money, we would not be able to maintain the rest of our lives.”

Disproportionate increases

While the rise in health care costs showed signs of moderating in 2004, medical expenses are still growing at three or four times the overall rate of inflation.

Costs are expected to increase at a similar pace in 2005 because of the introduction of expensive technologies and an aging population whose need of care is increasing.

The average cost for employer-sponsored health care coverage rose 7.5 percent in 2004, the lowest increases in the past four years, according to a survey of about 3,000 companies released last month by Mercer Human Resource Consulting.

Most experts attribute the slowdown to a shifting of costs to employees rather than to any fundamental moderation in the underlying cost of care.

Requiring employees to pay a greater share of insurance premiums, dropping dependent coverage and offering skimpier benefits with higher copayments are some of the tactics employers are using to shift costs.

In 2005, the trend toward reduced benefits is likely to continue, experts predict. Employees will see more high-deductible policies and health savings accounts, a form of coverage promoted by the Bush administration that yields savings for employers but costs workers more if they need care.

“This next year may be an important turning point around what this country and society decides the answer is,” said Gary Ahlquist, senior vice president at the consulting firm Booz Allen Hamilton.

Drive for accountability

Health savings accounts, which are federally approved medical savings accounts tied to high-deductible insurance policies, are part of a move toward what is known in the insurance industry as consumer-directed health plans.

These plans are designed to put more of the cost and decision-making power in consumers’ hands, making them think twice before seeking treatment for minor ailments.

“If the consumer-directed trend continues and … this shows some promise both on the cost front as well as a positive consumer experience, I expect the administration will continue to push that,” Ahlquist said.

So far, however, employers have been reluctant to embrace the concept in large numbers. The few that are offering these consumer-directed plans are generally doing so alongside more standard health plans.

Employers’ most common cost-saving approach is scaling back the benefits of health plans.

Until this year, San Francisco resident Berta Hernandez had full coverage for herself, her husband and two children through her job as an HIV program coordinator.

But rising costs forced her employer, Instituto Familiar de la Raza, to charge Hernandez a $180 a month for her coverage and even more to cover her husband and children.

While the Hernandez family makes too much to qualify for Medi-Cal or Healthy Families, they found the cost of dependent coverage too much to bear. Hernandez said she was able to find coverage for her children through the San Francisco Health Plan, the city’s public health program.

“My husband and I have regular jobs, and I don’t understand how other people can survive,” said Hernandez, 41. “I just buy my food, my transportation, the things my kids need, health care, books and that’s it.”

Health advocates say the fact that middle-class people are now facing the prospect of being uninsured is not necessarily a bad thing.

“When the problem of the uninsured affects the middle class, there will be a political will in Sacramento to solve the problem,” said Flanagan of the Foundation for Taxpayer and Consumer Rights. “When average voters and working families are uninsured, politicians, including Gov. Schwarzenegger, will have to deal with the affordability of health care.”

In the past year, a number of laws were proposed, affecting everything from prescription drugs to hospital costs.

Most notable was Proposition 72, a November ballot referendum that would have required large employers to provide health insurance for their workers or pay into a state fund. The measure was narrowly defeated.

Most experts don’t expect major changes on the federal level, so they are looking to the state in the coming year to provide some answers.

“In 2005, there’s going to be a major debate about health coverage in Sacramento,” said Anthony Wright, executive director of Health Access, a California coalition of consumer and labor groups. “From the point of view of the health system, the status quo is not an option, because it’s just deteriorating.”
E-mail Victoria Colliver at [email protected]

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