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Week of 4.18.08

Transcript: Health Care Meltdown: Looking for Solutions

BRANCACCIO: The Commonwealth of Pennsylvania is full of numbers these days....especially the cascade of public opinion polls purporting to forecast who's going to win next week's presidential primary. But for a real insight into the mood of the state, may I offer this indicator health care costs in Pennsylvania are running eleven percent higher than the national average, and they're rising twice as fast as the average wage. And it's a real contest over how to deal with that. Mary Olive Smith and Jessica Winchell Morsa produced our report.

BRANCACCIO: Joe Cesa likes his Joe. He's the man behind a place called Joe's Coffee Bar in Philadelphia's Center City. He and his staff of five pour some very fine fair trade coffee and tea. He pays a higher price for his coffee beans to give farmers and farm workers in far-off coffee producing countries better standards of living...and, maybe better health care. Joe's place is just steps away from Thomas Jefferson University Hospital. And health coverage—or the lack of it—is never far from his mind.

JOE: I haven't had healthcare for about—five years. My employees don't have anything. I just can't afford it.

BRANCACCIO:...can't afford insurance. So Joe Cesa, small businessman, is taking matters into his own hands.

JOE: thing I've done is I've tried to cover people when they—when they get sick.

BRANCACCIO: Joe's little makeshift health care plan requires cash and lots of hope...the hope that nothing really big goes wrong for him or his employees.
So you've tried to help out. But, I mean, there has to be some upper limit. I mean, what if someone gets catastrophically ill? I mean, you—you would foot that bill?

JOE: No, I—I couldn't. I wouldn't be able to do that. Luckily, it's just been minor things. You know—an abscess. Pneumonia. Things like that. And—but, you know, it's a couple hundred dollars and I'll—I'll spring for it. But—if it was something more serious, that's it. I don't know what happens.

BRANCACCIO: Nationally, in the last seven years, the cost has nearly doubled for employers to cover their workers . This leaves Joe and so many others with good intentions but no insurance.

JOE: I had a small restaurant—15 years ago. And—my staff had—healthcare then. I provided for them. And—there's no way I could do it now.

BRANCACCIO: Why? Why do you feel it's your responsibility to write any healthcare check for any of your employees?

JOE: I just feel like it's the—the right thing to do. It's the moral thing to do.

BRANCACCIO: Cesa feels so strongly about this that he's become a kind of health care reform activist...a coffee bar owner lobbying legislators both in the Pennsylvania state house and in Washington. It's Joe's feeling that something's got to give and it's got to give now. Just look at what's been happening nationally. Over the last decade. To start, the typical wage was $28,548 dollars a year and the average yearly premium for health insurance back then was about $2200 a person. Since then, the cost of insurance has more than doubled to about $5000 a year, wages? Not so much. And on top of all that, here in Pennsylvania, nearly 800,000 adults have no health insurance... none.

BEYER: About 27 percent of my residents do not have any healthcare coverage at all. Even though the overwhelming majority of them are employed full time.

BRANCACCIO: State Representative Karen Beyer's district is in southeast Pennsylvania, and includes the city of Allentown. Although she's a Republican, she's on the same side as Democratic governor Ed Rendell who considers health care reform a top priority for the state.

Rendell: "We cant kid ourselves any longer, the cost of escalating health coverage is crippling small business in Pennsylvania, and for growing numbers of our citizens lack of health insurance can literally be a death sentence."

BRANCACCIO: He's pushing what's called "PA-ABC", the Pennsylvania access to basic care bill. A bold but controversial new experiment in health care reform that could offer a glimpse at things to come nationally once the presidential election is settled. If it gets passed into law, it would change the health care landscape in Pennsylvania. If you need to know one thing about the bill it's this: nearly 70% of the uninsured, including those with pre-existing conditions, will be eligible for coverage under this state wide program.

Beyer says it became clear to her during debate on the Pennsylvania house floor that the situation is crying out for change.

BEYER: Frankly, I was sitting there thinking, "You know, I have healthcare insurance. And—and I—I make co-pays on doctor visits and things. But I have a pretty darned good healthcare plan, as a legislator. How can I sit here in good conscience and know that I have that for myself, but not be willing to vote for a healthcare plan for people who work hard everyday and try to take care of their children, and not advance this forward?"

BRANCACCIO: The plan could make health insurance affordable for people of modest means. For example, families earning around $42,000 a year could buy coverage for a relatively small, subsidized premium -about $40 or $50 a month. If you make more, you'd pay more.

BEYER: Last year we made a decision to cover all Penn—all Pennsylvania children. It seems to me to be hypocritical to ignore their parents. So, essentially, what we have is unhealthy parents raising healthy children. Doesn't make a lot of sense. I'm not supportive of every aspect of the plan. I think some of it needs some work. But if we're not acting upon it, if we're not actively debating this issue, actively working to find some kind of solution, then, in my mind, we're not doing our jobs...

BRANCACCIO: Rather than some magic bullet to cure Pennsylvania's ills, just about all players in this debate would agree that the health measure is a compromise. Reformers contend it falls far short of providing what they consider the holy grail of health care reform: universal coverage... Despite what the sign says there, not every uninsured person is eligible and even among the eligible, not everyone will sign on.
The health insurance industry and its allies are concerned for a variety of reasons. Most of the complaints center on just where the money will come from and the overall cost. And one politician gave this explanation for why he does not support the plan.

STATE SEN. JAKE CORMAN: Don't take our inaction as not interested or being callous. It's a matter of being fearful of saddling a big expense on the tax payers in the future who are already funding healthcare.

BRANCACCIO: But Beyer sees it this way.

BEYER: There is an issue of controlling costs within any healthcare plan. It is because we have uninsured folks in the State of Pennsylvania, that costs are rising. And if we're now insuring them, and also that they're participating by paying their premium—in other words, they're paying something instead of nothing, that inherently will allow costs to be controlled.

BRANCACCIO: The plan could cost 579 million dollars in the first year alone and the fear is that it's way beyond the means of a state budget that has already been hit hard by the weakening economy. Much of the funding would come from premium payments, federal funds, proposed tobacco taxes, and Pennsylvania tax payers at large. It may be expensive to do something about health care in Pennsylvania, but many Pennsylvanians are also painfully aware it's expensive to do nothing. Voters in the state consistently rank affordable health care as a top issue; it's so urgent a problem, its often on the list right behind the economy in polls of people here. It's an issue the presidential candidates are spending a lot of time on.

CLINTON: "Give us health care that is quality and affordable for every American and let's do that together."

OBAMA: "Drug and insurance companies spent 1 billion dollars on lobbying, and we're surprised that our healthcare premiums and our co-pays and the cost of prescription drugs go up year after year after year."

MCCAIN: "We also make must health care portable... portable. The biggest fear people have when they lose their job is losing their health insurance."

BRANCACCIO: And it turns out everybody we talked to over at Joe Coffee bar had an opinion on the subject. The nice man over in the corner there joked that no, he and his wife did not get a two-for-one special on their twin cataract surgeries earlier in the day. And then there was this 2nd year medical school student, Kevin Hauch check this out.

So, I'm over here talking to the boss, the guy who owns this, about healthcare coverage. And you're over here. And you're reading a book called—are you serious, you're—we're going to—Introduction to Health Policy. I mean, that's—that is—that is—thank god we found you. Thank god you were here. Cuz—

HAUCH:I'm on my way to my—health policy and economics class at—at—four o'clock today.



BRANCACCIO: Already, Kevin has seen the tough choices caused by the current health care system play out.

HAUCH: And we talk about how insurance reform can save money and cover more people. And—but that all kind of flies out the window when you actually spend time with a patient. One of my first experiences as a medical student, shadowing a doctor, I watched a doctor bargain with a patient to determine which—which lab tests they could get, while they were tempor—temporarily uninsured, before their husband went back to work. And it's that kind of thing that matters. We—we talk about this as an economic issue. And that's port—important. But this is really an issue about patients, and about getting treatment.

BONNIE: It seems to me that if my doctor, who has been treating me for over 15 years, says that I need this kind of treatment, or these pills, the kind of approval issues, and process to go through, it's incredibly difficult, and often very frustrating.

PATRICIA MCKINNEY: I'm being treated for an illness, and my out-of-pocket expenses are enormous, even though I have—under today's standards, excellent coverage. If they—if it goes on for me, I could end up being in Michael Moore's next movie about it. I could be one of the people that ends up living out of my children's shed. But—I'm one of the lucky ones. So, I know it is an issue here in Pennsylvania, and of course, the country.

BRANCACCIO: Patricia here is touching on a key feature of the health care debate in the keystone state. How even "the lucky ones"—to use her term—have had it with paying what they see as a lot for less and less coverage. Diane Doherty lives in the Philadelphia suburb of Glen Mills with her husband Sean. They've got their hands full...running a successful small business of their own and a household with four children. With the youngest in diapers and the oldest in braces, you can imagine they need a trip to the doctor now and again. Unfortunately, it's been tougher than that.
Five and a half years ago, it became clear that something was wrong with their son Ryan. He couldn't hold down solid food. He began to lose weight rapidly.

DIANE DOHERTY: They thought it was reflux. It's just—we were like a deer in highlights, look—you know, you didn't know what to do next. They'd send for this test, this next test, you've gotta get a referral, you've gotta go to this doctor, all these phone calls, what's covered, what's not?

BRANCACCIO: While the doctors were testing Ryan trying to figure out what was happening, they ordered up a prescription baby formula that was expensive - about $500 a month. Even though they were insured their plan would not cover Ryan's sole source of nutrition. The Doherty's were forced to turn to a lower-quality over-the-counter formula to save money.

DIANE DOHERTY: We don't know if it compromised his health. What if? Would his—would he have been cleared up? You know, his—his system's—immune system stronger? We don't know.

BRANCACCIO: Eventually, Ryan was diagnosed with an auto-immune disorder that causes serious allergies to foods. Meantime they were switching health plans ...and as their health care plan changed their premium costs went up.

DIANE DOHERTY: Because we're self-employed, you're just looking to cut costs. So, you—you try and shop around, but there's not many options. And now we're to an HMO, which is the cheapest plan that we can find, but it's still expensive.

SEAN DOHERTY: And with larger co-payments than we use to have.

DIANE DOHERTY: Higher deductibles.

SEAN DOHERTY: More out of pocket expenses.

BRANCACCIO: Prescriptions are costing the Doherty's $40 a co-pays when they see the doctor. You might think, not so bad... but the Doherty's are writing a big check every month for the insurance that they do get. And just what are they paying?

DIANE DOHERTY: Just for the healthcare, just about $1,000 a month.

BRANCACCIO: A thousand dollars a month?
Is that something that comes easy?


SEAN DOHERTY: Our mortgage payment isn't much more than that.

BRANCACCIO: And it's not like Diane and Sean don't know how to shop for the best insurance deal. They are in the insurance business...although, not the health insurance business. They sell car, home and life insurance. And as business owners, the Doherty's are stuck paying for all of their own coverage.

SEAN DOHERTY: Well, even if we wanted to hire somebody, there are a lot of people that base their employment decision on the healthcare benefits that are offered. And so, to attract a quality employee, you've got to really spend a great deal of money, not necessarily in their compensation package, but maybe their healthcare. And they might—not want to work for you just based on the healthcare package you do or don't offer.

BRANCACCIO: Getting a better price on health care would be a big deal for small businesses. Currently more than half of Pennsylvania's uninsured are self employed or work for small companies. And under this proposed plan some of these folks would have better rates.

BEYER: It's a plan that supports small businesses. Those businesses an employee, you know, one to 50 emplo—employees. Where they're paying into it, the government is subsidizing it. So there's ownership on both ends. But the government is essentially the back stop to it.

BRANCACCIO: Small businesses have healthcare reform on the brain but so do many larger businesses. Shout "universal coverage" these days and its not just a stampede of liberals who come running. Some of the biggest names in corporate America—names that include PepsiCo, General Mills, Kraft Foods and Morgan Stanley—are now on the record supporting some kind of market-based reform that would provide health insurance to all Americans, it's a bottom line business issue.

One larger business in Pennsylvania spends a lot of management time keeping on top of the health care coverage it does provide. Rich in history, and sugar, the Tasty Baking company has made it through many economic struggles in the last 94 years - growing into a $250 million dollar a year business.

Tastykake, home of the butterscotch krimpet and all manner of cupcakes is also home to 875 employees who get health insurance through the company, at significant cost to them, and the company. David Vidovich as vice president of human resources and labor relations is the lucky guy who oversees the bakery's health care plan.

What's the company sense when it comes to healthcare in America? Does the system work as it now stands? Is some work necessary to fix it?

VIDOVICH: Clearly, we're all excited this is a national issue. We think it needs to be there. The costs continue to go up year after year. We look at a potential 10 to 12 percent increase every year.

BRANCACCIO: It's gotten to the point that among the biggest costs at Tastykake is the 135-thousand pounds it uses in sugar every day care.

VIDOVICH: For our company, it's about 30 percent of our total compensation is just in healthcare.

BRANCACCIO: Does it get to the point where it's healthcare benefits or wages? That you have to make those kind of tradeoffs?

VIDOVICH: I don't know that it'll ever get to the point where it's one or the other. But, clearly, we have a total budget. We have obligation to our shareholders. We have needs of employees, needs of the company. There's a balance in there. And when one leans harder than the other, the other suffers slightly.

BRANCACCIO: With health care making up nearly a third of all of its employee compensation, Vidovich says moves to bring down that cost would be welcome at Tastykake. In the meantime, Tastykake believes very strongly in preventative healthcare...and says that there is a direct dollars-and-cents connection between their costs of health coverage and getting employees to exercise, quit smoking, and to eat well. Now, you knew I had to ask about—diet and wellness. Do you encourage healthy eating among your employees?

VIDOVICH: We do encourage healthy eating among our employees. And, you know, we—we think that Tastykake is part of that healthy eating. Everything in moderation.

BRANCACCIO: Tasty Baking Company workers are also keenly aware of costs...employees themselves pay 23 percent of the cost of their coverage. Vidovich believes that keeping on top of the health stats of employees, and reacting to what his team learns, is essential to keeping premium costs from rising further.

VIDOVICH: In 2007, for example, our company saw a spike in cancer rates. So, this year, in 2008, we're putting together—part of our wellness program will include partnering with the [American Cancer Society on their Active for Life campaign]... to try to get the employees to understand that how their lifestyle is dictated often dictates how their healthcare costs—end up... So, we're—we're taking a proactive stance to try to help them reduce their costs and reduce our costs.

BRANCACCIO: The Commonwealth of Pennsylvania's battle over how to get health care coverage to many more of its residents is more than just a policy lesson. It is also a political lesson that the presidential candidates who are now spending so much time in Pennsylvania ahead of next week's primary should watch carefully.
Karen Beyer the state representative from the Lehigh Valley says this kind of reform has better chances at the state level.

BEYER: It's nice to see that there's finally a debate at the federal level. But I'm not holding my breath. The Commonwealth doesn't really wait for the federal government. Frankly, if we did, we'd be waiting a heck of a long time.

BRANCACCIO: But even in Pennsylvania, the waiting isn't over. The state health care plan is currently tangled up in the legislature with a demand for malpractice insurance relief for doctors. A previous subsidy expired. And unless the whole plan passes, doctors will have to pay malpractice premiums in full...which makes that influential group of voters very unhappy. Mix this with a state that is home (base) to several big insurance companies and all their lobbyists and the bill's backers have a pretty messy fight on their hands . The collective unrest is stepping up the pressure for some sort of here's that word again, compromise. The key idea that experts expect will define any move toward universal coverage—or more-universal coverage at the national level.

BEYER: You know, this is a problem. You know, for too long, lawmakers have decided that, "I'm a Republican," or "I'm a Democrat. Therefore I'm just going to block anything that comes forward." And for too long, we've been too partisan.

BRANCACCIO: Beyer thinks what will get results in the end is this bi-partisan effort.

BEYER: And I think that if we. Take care of the basic needs, try to create an environment where the marketplace and people can flourish, then I think—we're doing the right thing.

BRANCACCIO: Need some solid advice on getting and keeping health insurance in your own state? You don't have to call your congressperson. Just go to our website. is the place to start.

HINOJOSA: Now an update...last month we reported on California's new law restricting potentially toxic chemicals called phthalates from plastic toys and other products meant for small children. The ban goes into effect next January. There's growing concern that phthalates might disrupt children's hormonal development, possibly contributing to male infertility, cancer and other problems.

RAPHAEL: Phthalates became almost the poster child for this problem of right to know, that as consumers, we don't have the right to know in this country what we're being exposed to.

HINOJOSA: Debbie Raphael is an expert on toxics for the city of San Francisco. She took me toy shopping to show me just what parents are up against.

RAPHAEL: There is no way by looking, reading the label. There's nothing on this that says doesn't contain phthalates, does contain phthalates.
And then there is the octopus, another, not really something is designed to go in the mouth, but chances are, if I gave this to my daughter, she would want to chew on it, it's attractive and it's [SQUEAK]—squishy—And it makes noise.

HINOJOSA: Phthalates are often used to make plastic products soft and squishy. We bought 18 toys and put them through a process to test for phthalates. We found that eight contained levels that will be illegal here under California's ban. There is still scientific debate about just how dangerous phthalates are but by banning the chemicals, California's legislature decided it would rather be safe, than sorry...

FIONA MA: ...chemicals are bombarding our babies every single day.

HINOJOSA: This does not please the American Chemistry Council, which lobbied fiercely to prevent the ban in California. In a statement the Council insists: "After more than 50 years of use, phthalates have not been shown to cause harm to human health or the environment." But since our report aired, the State of Washington has become the second state to restrict phthalates.

GREGOIRE: Nothing is more important than the heath and safety of our children.

HINOJOSA: Washington State Governor Chris Gregoire recently signed a tough new "toxic toys" bill.

GREGOIRE: We in Washington are not going to wait to protect our children and the toys that pose a danger to our children are not welcome in here Washington state.

HINOJOSA: And many other states are lining up to do the same. Just two weeks ago a bill was introduced in New Jersey. Similar measures are also pending in 11 other states. States are regulating chemicals, investigative reporter Mark Schapiro told us, because the federal government is not:

SCHAPIRO: The U.S. hasn't banned a chemical in like 17 years. Hasn't banned a single chem—

HINOJOSA: Not one?

SCHAPIRO: Not one chemical.

HINOJOSA: Several of the states taking action are also attempting to ban another chemical, one frequently found in plastic baby bottles and other house hold products. It's called bisphenol-A .... Like phthalates, bisphenol-A is suspected of disrupting children's hormonal development. Just this week a toxicology panel convened by the National Institutes of Health said that bisphenol A, among other things, could contribute to early puberty for young children ..."the possibility that bisphenol-A may alter human development cannot be dismissed," the report says.

We are watching the story closely and we'll fill you in as it develops.

BRANCACCIO: And that's it for NOW. I'm David Brancaccio.
We'll see you next week.

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