Pulling it Together: A Holiday Reminder on the Economy and Health Care
With so much of the focus on the political dynamics of the health reform debate and a few hot button issues, I wonder if we have lost track of what propelled health care to the top domestic issue in the first place—people’s concerns about paying for health care in the middle of a deep recession. This gave health greater traction as a national issue and brought us our best chance at national health reform legislation in fifteen years if not ever. It wasn’t only that health care costs were going up or that people were paying more out of pocket each year, it was also that people’s economic circumstances were deteriorating, making it much tougher and more painful to pay their health care bills. The holidays are an appropriate time to remember these underlying economic concerns which are still with us today and their close connection to health care.
I wrote a column about a year and a half ago called Health IN the Economy. At the time, economic worries were rising, and it was clear that they were linked to concerns about health care. The unemployment rate was 5.5% in May 2008 when I wrote that column. It’s 10% now (and 12.5% here in our home state of California).
We know that as the number of unemployed goes up, the number of uninsured goes up as well. As this chart shows, for every 1 percentage point increase in the unemployment rate we estimate that there is about a 1.1 million person increase in the ranks of the uninsured. With unemployment rising 2.8 percentage points since the latest Census figures on health insurance coverage (for 2008), that suggests about 3 million more people uninsured.
The latest quarterly earnings reports for health insurance companies illustrate the decline in private insurance coverage. Looking at the SEC filings of the six largest publicly-held insurers—which collectively represented over half of all the privately insured in 2008—enrollment has dropped by 2.2 million people since the end of 2008. If the rest of the industry exhibited the same trend, 4.2 million lost private insurance over this period.These numbers would all be far worse if not for the counter-cyclical role Medicaid plays in cushioning the impact of people who lose employer coverage when they lose their jobs, particularly for children.But the impact of underlying economic conditions on people extends well beyond growth in the uninsured. One of our surveys found that 50% of lower wage workers reported that they themselves or someone in their family had been laid off or lost their job in the last year or had overtime or hours cut back or experienced both. Other surveys have found similar results, including a recent ABC News/Washington Post survey that found 30% of the American people as a whole reported they or someone in their household had lost a job or been laid off. Moreover, wages are stagnant—average weekly earnings are up just 1.6% over the last 12 months.
We don’t make the connection between employment data and health care often enough, but what numbers like these should signal is that many more Americans will have problems paying for health care and health insurance and delay or forego care while the economy rebounds. This is why we consistently see in our tracking polls that between 50% and 60% of the American people report that they or a family member have put off health care of one kind or another because of cost. As a field, we recognize the impact of unemployment on the number of uninsured, but the impact of weak labor markets on people’s ability to pay their health care bills is the broader and more politically telling effect.
Since the primary financial protections of reform under current proposals would not kick in until at least 2013 and possibly 2014, there is a window of several years before the jobs picture improves and tangible help arrives. Our polls show the public expects help from health reform years earlier than that. It seems clear that greater efforts need to be made to inform the public about what the actual timetable is so that the law is not met by a big expectations gap.
The current employment numbers also underscore what a dramatic change health reform would bring in cushioning the impact of economic downturns in the future. While Medicaid and CHIP do that now, the impact is limited by categorical requirements and eligibility thresholds that are in some states very low. Under the current House and Senate bills, people covered in the exchange with incomes up to 400% of the poverty level (about $88,000 a year for a family of four) would be eligible for subsidies, providing a new safety net for working families and the middle class. The adequacy of those subsidies in an ultimate health reform bill—both how much people have to pay in premiums and the scope of their coverage and amount of their out of pocket costs—will be central to how people perceive reform if and when it goes into effect.
There are also implications for research. The health services research community has made a seminal contribution documenting the implications of being uninsured. That issue, once hotly debated, is no longer disputed in the same way thanks to research. Instead the debate is about how best to solve the problem. We now need to do more to document the problems insured people are having as well paying their health care bills—the impact not only on their access to care, but also on their overall economic security and their ability to buy food or clothes, pay the rent or the mortgage, pay for gas, or send a kid to college. It is health care tunnel vision simply to document impact on access to care because people experience the impact of health care costs on their family budgets more broadly.
As we emerge from this economic downturn and unemployment starts to fall, Medicaid and CHIP will continue to be immensely important in preserving health coverage for people who are out of work or who enter low-wage jobs without health insurance. But Federal help to the states provided under the economic stimulus package will soon expire and many states will remain in a precarious financial position for several years. A new study from our Commission on Medicaid and the Uninsured out just yesterday examines these issues and underscores that the ability of states to sustain current eligibility levels as reform gets implemented will need to be carefully monitored.
And businesses and individuals can ill afford big premium increases right now, so recent (though unscientific) reports of pre-health reform premium spikes are concerning. We will track them closely in future Kaiser surveys to help policymakers consider whether they need to respond and how.
As we all focus on the health reform debate, in this holiday season it is appropriate to remember that more people are struggling with health care bills than when we began this debate. While the jobs picture is starting to brighten, with the latest government report showing the unemployment rate actually falling from 10.2 % to 10%, improvement is expected to be slow. This is a reminder of why people need the kind of help health reform can deliver. But it is also a reminder of why for the next several years, while the country may be gearing up to implement health reform, we can’t take our eyes off of the problems people are having today, or of the role that the existing programs that serve them will continue to play.