Insurance Gap

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• NICK SWINEHART:

  It was just a regular-size mole. It looked like a mole, regular brown color, and then it just got bigger, like from being out in the sun.

• SUSAN DENTZER:

  Nick Swinehart, age 20, is a self-employed dry wall hanger from Michigan. His girlfriend, Christina Shackley, and their 10-month-old baby, have health insurance, but Swinehart does not. So when a mole appeared on his back two summers ago, he put off going to the doctor.

• NICK SWINEHART:

  I didn't have enough money, and I didn't think it was no problem. A couple times I tried ripping it off myself, but it hurt too bad.

• SUSAN DENTZER:

  Last year, Swinehart finally went to a free church-sponsored health clinic and had the mole removed.

• NICK SWINEHART:

  A little less than a month later, they called me back and told me it was malignant melanoma.

• SUSAN DENTZER:

  What did you think when you heard that?

• NICK SWINEHART:

  I was in shock for a minute, because I was so young. My doctor said that I was the second youngest kid he's ever seen with that type of cancer.

• SUSAN DENTZER:

  Although Swinehart's cancer was unusual, he is hardly alone in his lack of health insurance. The U.S. Census Bureau reported today that 43.6 million Americans were without health coverage in 2002. That number was up 2.4 million from 2001. It was the largest year-to-year jump in the number of uninsured in a decade.

  Roughly four out of five of America's uninsured are people much like Swinehart. They're full-time workers or the dependents of workers, usually in families with low to moderate incomes. Often the uninsured work for small businesses that don't offer coverage, or if they do, workers and their families can't afford their share of the costs. That's a driving force behind the fact that nearly one in four of the nation's uninsured are children.

  The Census Bureau says this year's jump in the number of uninsured occurred largely because employer-provided health coverage shrank. Just 61.3 percent of Americans had employer-sponsored coverage in 2002, down from 62.6 percent a year earlier. That makes 2002 the second year in a row that the share of Americans with employer coverage fell.

  Since his cancer was diagnosed, Swinehart has incurred well over $20,000 in expenses from battling his disease. He's still working and hoping for the best, despite an uncertain prognosis.

• NICK SWINEHART:

  If you got health insurance, you can go to the doctor. But if you don't have health insurance, you can't go to the doctor; you've just got to live with the sickness, or either go to the doctor and build up bills and not pay the bills and get bad credit and never be able to get anywhere in life.

• SUSAN DENTZER:

  That's why Swinehart and a growing corps of advocates for the uninsured say it's time for federal policymakers to act.

• JIM LEHRER:

  Margaret Warner takes it from there.

• MARGARET WARNER:

  What's behind this jump in the number of uninsured and what might be done about it? For that, we turn to a consumer advocate and a business representative. Ron Pollack is executive director of Families USA, a health care advocacy group. And Kate Sullivan is a director of health care policy for the U.S. Chamber of Commerce, which represents three million businesses. Welcome to you both.

  Ron Pollack let's just first of all flesh out the 6 percent jump last year a little more. It wasn't as you might have thought the poor or the elderly or the young — the big jump was in the middle class.

• RON POLLACK:

  No question. This problem is really a story about working families and middle class families. And the reason there was such a big jump is because the economy is not in good shape. We have a lot of people who have lost jobs.

  I would say the key three factors was unemployment was up and since most people get their health coverage through their jobs, they lost health coverage. Secondly, health costs are rising at double digit rates and for everybody those costs are unaffordable whether it's businesses, individuals or government. And lastly, businesses who feel they don't have any other alternative are passing on more costs to the workers who find it unaffordable. Those are the key factors that cause the big rise in the number of uninsured.

• MARGARET WARNER:

  So Kate Sullivan when they say it was a drop in employer provider coverage. It isn't just the folks who lost their jobs; some people kept their jobs — the companies just stopped offering it.

• KATE SULLIVAN:

  The really big news was nearly 900,000 more people who are working full time all year long did not have health coverage. They have lost that workplace coverage. It's a real concern. Either as Roger said they can't afford the premiums. Increasingly, we find small businesses are finding it really difficult to even find an affordable plan they can offer.

• MARGARET WARNER:

  Is that because the insurance companies — how high are they jacking up — are the rates going up?

• RON POLLACK:

  The costs are rising at double digit rates, about 14 percent. Now I can tell you at Families USA we're a non-profit organization but we're like a small business. We have approximately 45 employees. The increase in cost to us over the last two years were 24 percent and 26 percent. So this is something that is rather substantial throughout the whole economy.

• MARGARET WARNER:

  And as you pointed out, Kate Sullivan, even the companies that are maintaining coverage employees have to pay a lot more toward the premium; they have to pay more in co-pays and deductibles. Do you have any handle on how many employees just say I can't afford to have much taken out of paycheck, and they just opt out?

• KATE SULLIVAN:

  We do see this trend and that is what really has us alarmed, is people who are being offered coverage. We know employers are staying in the game. They are saying a last resort is we're going to drop. People turn down coverage often at work because they are on their spouse's plan or they have some other coverage, but 25 percent who turn down coverage remain uninsured. And that's a real concern because it's available to them. They're turning it down. Their kids wind up uninsured and their spouse remains uninsured.

• MARGARET WARNER:

  Now Ron Pollack, a White House spokeswoman responded saying this is why the administration is working to increase economic growth because that will bring down the number of unemployed and uninsured. Is there that correlation?

• RON POLLACK:

  There is a correlation certainly; a significant part of the increase of the number of uninsured is because more people are unemployed.

  When people are unemployed, what are their choices? There's a thing called COBRA coverage. In effect what it does is it allows a laid off employee to stay in their previous employer's coverage but they have to pay the full freight. The average cost of employer-provided coverage for a family today is over $9,000. As Kate will tell you and I will tell you from my experience at Families USA, for many companies [it's] $13,000, $14,000. How does a person who is unemployed living on an unemployment check pay for that?

• MARGARET WARNER:

  Ms. Sullivan, do you think — we have seen economic growth is increasing this year though so far it's what economists are calling a jobless recovery. Do you think if growth continues we won't see an increase like this, things are get better or are there other things playing here?

• KATE SULLIVAN:

  It's still going to be $10,000 when you start hiring more people again — each employee come as long with $10,000 if they have family coverage — $10,000 overhead expense. Employers are saying how can I take on that additional expense at hiring this new employee. Small businesses are looking around saying I shopped around last time I got that 28 percent rate increase, I found out there wasn't anyone else who beat it or there wasn't anyone else to call — they wouldn't call me back. They start negotiating what can we do? Employers are saying what can we do to lower our health care costs?

• RON POLLACK:

  Margaret, I would like to build on something Kate just said. I think we're go to continue to see raising costs. I think we are going to continue to see employers feeling they have no recourse so they are passing on the costs to the workers but there's another factor and that is what the Census Bureau tells us what cushioned the impact of losses of coverage were the public programs like Medicaid and the State Children's Health Insurance Program.

• MARGARET WARNER:

  For either the old, or the young or the poor.

• RON POLLACK:

  Yes and one of the things that we all need to understand is every one of 50 states are experiencing a fiscal crisis and they feel that they have to cut their budgets one way or another. Medicaid is the largest particular program that a state pays for and so we're now seeing a lot of states cut back. So the ability of public programs like Medicaid and the Children's Health Insurance Program to cushion the impact are being compromised. We have to make sure that does not continue.

• MARGARET WARNER:

  The numbers could go up again in 2003 even though the economy may pick up?

• RON POLLACK:

  Absolutely.

• MARGARET WARNER:

  What are the alternatives here?

• KATE SULLIVAN:

  One thing we need to do — if you have access to a workplace plan you should be able to afford to participate in it. If you have a very modest income tax credits or a voucher to help pay your portion of the premium or to have the kids in the plan should be part of the dynamic when we are looking at not just expanding Medicaid but keeping people in their employer plan.

  You've got to do something for small business. Help let get together with other small businesses, buy coverage. Big employers do this right now. They don't go through an insurance company. They self-insure their costs. Costs are still high, but the rate of growth is less. We need to look at trying to do this. This is something where an idea is around for a long time. Strong support. It doesn't cost the government any money to put the new choices into the marketplace for small business.

• MARGARET WARNER:

  Though the tax credits cost the government money.

• RON POLLACK:

  The tax credits cost the government a lot of money and I don't think they are going to do much good. What the president has offered, which is different than what Kate talked about, are individual tax credits not tax credits that help small businesses. These individual tax credits have two problems. The Bush administration's individual tax credits provide $2,000 to $3,000 per family. But if the costs of coverage per family are nine, ten, fourteen thousand dollars, how is a family going to pay for it? It's like throwing a 10-foot rope to somebody in a 50-foot hole. It doesn't help.

  The other thing — this policy unlike what Kate has been describing is designed to move people more into the individual market rather than stay in the employer market. I think that's not a good thing to do because the people who need health care the most, people who are sick, people who are disabled, they have trouble getting health coverage in the individual market because insurance companies don't want to sell to them.

• MARGARET WARNER:

  The last time we saw this big an increase — this big a jump in one year was 1992 that provided this huge political impetus for the Clinton campaign and President Clinton as we know went for the national health care plan. Do you see this news today having any kind of political impact of that sort, getting people to start talking about national health insurance or single payer?

• KATE SULLIVAN:

  Clearly. …We had that dialogue ten years ago. We learned a lot from it. We have a lot of Democratic presidential candidates putting their ideas out there. We have the Congress leadership talking about their solutions. I think we have this balance but it has to be done. You cannot continue to let people be open and exposed that way. Health coverage is economic security for a lot of families.

• MARGARET WARNER:

  Do you see the political will to do anything let's say in the next 12 months?

• RON POLLACK:

  I think that this is changing. The issue of the uninsured used to be a problem of low income people, a sort of discreet, disadvantaged population. So this was an issue of altruism for other people. Now this is an issue of self-interest for the middle class and for working families. That transforms this issue. Remember this number of uninsured — 43.6 million people — that's more than the aggregate population of 24 states and the District of Columbia. I think people understand this is a very widespread problem and so politically I think it needs to be addressed.

• MARGARET WARNER:

  All right. Ron Pollack and Kate Sullivan, thank you both.

• RON POLLACK:

  Thank you.