Health-Insurance Gap Surges as Political Issue

Democrats, Governors, Business Push Change,
But Fixes Vary Widely


Wall Street Journal, January 19, 2007; Page A1


Suddenly, the long-festering issue of providing health coverage to the one in six Americans who lack it seems to have leapt to the top of the national to-do list.


On Tuesday, an unlikely coalition of the Business Roundtable, AARP and the Service Employees International Union called for "affordable quality health care for all."


On Wednesday, Pennsylvania's governor became the latest to offer a way to cover the uninsured in his state.


Yesterday, another strange-bedfellows coalition, ranging from a health insurers' trade group to a liberal advocacy group, unveiled a plan to subsidize health premiums with a mix of tax credits and federal spending. And Oregon Sen. Ron Wyden dusted off a plan to make people buy insurance, with employers chipping in. On Tuesday, President Bush is expected to talk about his ideas for shrinking the ranks of the uninsured.


Thrusting the long-running issue to the fore are political and economic forces that have been building for years but are given new force by political events. Not only have the Democrats taken over Congress, but state political leaders, including Republicans such as California Gov. Arnold Schwarzenegger, are moving on their own to change the system. And U.S. companies increasingly complain that the current employer-paid insurance system puts some of them at a disadvantage -- either globally or vis-a-vis firms that won't provide insurance. (See related story.2)




The News: Many Americans' lack of health insurance has abruptly become a hotter political issue, with proposed fixes proliferating and states taking action on their own.

The Cause: Political winds shift and big companies say employer-paid insurance puts them at a global disadvantage.

Bottom Line: Disagreement over cures may prevent change, but issue will be hot in 2008 presidential race.

All this increases the chances that Washington will try to tackle at least a piece of a health-care problem that has only grown bigger since the Clintons' failure at comprehensive reform back in 1994. But it still doesn't necessarily mean anything big will happen, at least nationally, in the next couple of years. The primary reason: There's nothing approaching a consensus on what to do.

All this increases the chances that Washington will try to tackle at least a piece of a health-care problem that has only grown bigger since the Clintons' failure at comprehensive reform back in 1994. But it still doesn't necessarily mean anything big will happen, at least nationally, in the next couple of years. The primary reason: There's nothing approaching a consensus on what to do.


There is, for sure, a growing consensus that the rising number of Americans without health coverage is a problem, not just for them but also for employers and governments that pay the bills. U.S. auto companies "are paying for the emergency-room treatments of people who can't afford it," complains Tom Lasorda, chief executive of DaimlerChrysler AG's Chrysler unit. "I'm paying for it because the rates go up because I have to cover the cost."


But there is a splintering of approaches to the problem. Some favor bigger government. Others would bolster the decaying system of employer-sponsored insurance. Still others would make health insurance more like car insurance and have people buy their own, aided by various subsidies.




See a list of events and announcements related to health care coming up this week.


Those who are optimistic that the recent talk portends action see a harmonic convergence of interests that suggests the latest round of press conferences and plans offered by coalitions will produce something tangible. Andrew Stern, president of the Service Employees International Union, or SEIU, says that when the Clinton health initiative failed, "business believed that they could somehow manage health costs, and the economy was far less global." The world has changed. "Having had 13 more years of increasing costs...," he says, "people realize that you can't manage this as a company -- we have to manage this as a country."


The problem has long been apparent and is getting worse. The number of Americans without health insurance is growing, and rising premiums have lessened employers' willingness to provide it. Though a majority of Americans still get insurance through the workplace -- a practice tracing to the 1940s, when businesses offered fringe benefits in lieu of higher wages -- the fraction of employees offered coverage at work fell to 77.4% in 2005 from 81.2% in 2001.


At last tally, the Census Bureau said 15.9% of Americans, 46.6 million in all, lacked health insurance. Government programs -- Medicare, Medicaid and the 10-year-old State Children's Health Insurance Program -- pick up the elderly, the disabled and the very poor.


Nearly 70% of the uninsured are in families with at least one full-time worker. In some cases, the employer doesn't provide coverage. In others, the employee can't afford it or doesn't take the coverage that employers offer, according to the Kaiser Commission on Medicaid and the Uninsured, a private foundation-backed effort.


So by no means are the uninsured all poor; more than a fifth live in families with incomes above $40,000. And it would seem they or their employers can afford to pick up a part of the tab -- an important factor in making some of the proposals floating around feasible.


The heightened political focus on the issue reflects pressure from two sources. One is voters' anxieties, both about the cost of care and about the risk of losing insurance for reasons such as changing jobs. "A member of Congress goes home and two issues come up every time you get together with folks: One of them is Iraq, and one of them is health care," says Sen. Wyden, an Oregon Democrat. "A lot of people who have coverage think they're one rate hike away from losing their coverage."


The other is an ever-louder complaint from U.S. businesses that they can't compete in a global economy when companies from other countries don't have to pay for health care. Deere & Co. Chief Executive Robert Lane told Congress last year that failure to act could result in a "limiting of covered services, loss of employer-provided health care...and even a loss of American jobs, both in the manufacturing and service sectors."


The uninsured, of course, make up only one of the U.S. health-care system's issues, alongside quality and, especially, rapid rises in costs. But confronting the uninsured problem is politically appealing and it seems not quite as intractable. "Dealing with cost is really hard. It means leveling with the public. It means telling people you can't have everything you want or your doctor wants," says Paul Ginsburg, president of the Center for Studying Health System Change, a foundation-backed think tank in Washington.


Then there's raw partisan politics. Democrats believe they have the political wind at their backs and that one reason they do is public anxiety about health care. Republicans feel a need to respond, and often look for approaches that rely less on government and more on market forces.


At the same time, some proponents of free trade seek ways to ease workers' anxieties about globalization so they might be less hostile to it. Recent initiatives at the state level reflect the public pressure for some kind of governmental action -- and at the same time increase the pressure for some federal action.


"Legislators and governors are feeling pressure from small businesses," says Katherine Swartz, a professor at the Harvard School of Public Health. She has another idea for dealing with the problem: government-subsidized reinsurance pools that might make it more affordable for employers to offer insurance.


Ms. Swartz says that "nobody believes anything is going to come out of Washington. States are more willing to say let's try something." Flush state budgets help. A survey by the Kaiser Family Foundation found that one-third of states, 17 in all, increased access to health coverage in 2006, often to low-income children. For the first time in four years, no state restricted income eligibility in Medicaid or in the State Children's Health Insurance Program.


Last year, the then-governor of Massachusetts, Republican Mitt Romney, helped by Democratic Sen. Edward Kennedy, cut a deal with Democratic leaders of the state's legislature. It required state residents to obtain insurance, created a state-sponsored "connector" where they could go to buy it, and required all but the very smallest employers to provide insurance or pay a penalty.


Vermont and Maine also have enacted universal-coverage plans. Vermont aims to have 96% of state residents insured by 2010 through a mix of subsidies and employer contributions, plus a tobacco tax. Maine's program, aimed at insuring all by 2009, is grappling with inadequate funding, fewer people enrolling than anticipated and lawsuits from business over the financing mechanism.


Several other states are mulling ways to increase coverage for their residents. Some mix expanded government programs with mandates on individuals to purchase insurance -- along with subsidies for low-income people, new insurance pools to share risks, and mandatory employer contributions.


Last week, California Gov. Schwarzenegger outlined a plan that would make uninsured residents purchase insurance, and require businesses with 10 or more employees to either offer insurance or pay 4% of their payroll into a fund for the uninsured. The plan would levy new taxes on doctors and hospitals to help pay for the state's estimated 6.5 million uninsured, a number that includes illegal immigrants.


On Wednesday, Pennsylvania's Democratic governor, Edward Rendell, became the latest recruit, with a plan to cover his state's nearly one million uninsured. He stopped short of a Massachusetts-style mandate, instead proposing to phase in a requirement that those with incomes above 300% of the poverty level ($60,000 a year for a family of four) purchase health insurance, along with full-time college and graduate students. His proposal would also penalize employers that didn't offer insurance and would provide money to help individuals afford it.


On Wednesday, Pennsylvania's Democratic governor, Ed Rendell, became the latest recruit, with a plan to cover his state's nearly one million uninsured. He stopped short of a Massachusetts-style mandate but would penalize employers that didn't offer insurance and would provide money to help individuals afford it.


As things stand, Mr. Rendell said, "It is a tremendous deterrent for businesses that are considering locating in Pennsylvania to know that in addition to paying for their own employees' health coverage, they will be subsidizing the costs of the uninsured" as hospitals charge them more to cover the free care the hospitals must give.


From the perspective of big companies, the mandatory-employer-contribution programs at least level the playing field within the U.S., though they don't do much to ease the problem of competing globally.


In Washington, it's far easier to get agreement on the goal -- "affordable, quality health care for all" is the mantra -- than on the way to get there.


One camp, almost entirely Democrats, sees the current turmoil and dissatisfaction with job-linked insurance as hastening a single-payer national system. It's an idea many Democrats have pushed since the days of Franklin Roosevelt and Harry Truman.


Sen. Kennedy, head of the Committee on Health, Education, Labor and Pensions, is proposing to expand Medicare beyond the elderly and disabled to all Americans, beginning with children and those aged 55 to 64. To many, that still seems politically unrealistic, especially given problems that Canada and Britain have run into with their national systems, including long waits and rising costs. But expanding the State Children's Health Insurance Program, which was created in 1997 to help states provide coverage to more low-income children, strikes some Democrats as a feasible step in this direction.


Another camp, including some Bush administration officials, sees the turmoil and decay of job-linked health insurance as a reason to go in a very different direction. They would let individuals shop for health care much as they do for other things. They would use tax breaks and vouchers to help people afford insurance, preferably high-deductible policies that prod citizens to make wise choices.


The government already is taking steps to make Americans better consumers of health care. To encourage people to be more cautious in using health care, the Bush administration is seeking ways to wean Americans off generous schemes that pay for almost anything. In their place, it favors high-deductible policies that cover the big expenses, plus ways to let people pocket the savings if they avoid unnecessary treatment or shop for lower-priced care. Health Savings Accounts are a way to do this, offering tax breaks to people who take high-deductible policies and allowing them to escape taxes on wages set aside for health care, keeping the money if they don't spend it.


Mr. Bush is expected to continue pushing in this direction. Among possible proposals: ways to make the market for individually purchased insurance more efficient, and encouragement to small businesses to help employees buy bare-bones policies. Administration officials argue that current tax law imprudently encourages employers to provide unlimited amounts of health care to workers who aren't taxed on that as income. One possible change would be to limit that tax break and devote any revenue raised by the change to subsidizing coverage for lower-income Americans.


In a recent op-ed piece in The Wall Street Journal, Mr. Bush listed "affordable health care" among the biggest issues facing the American people.


A third camp, borrowing from what's going on at the state level, essentially would widen existing sources of health insurance -- government, employers and individual policies -- so that they cover everyone. Such plans sometimes require that everyone get insurance; penalize employers that don't offer it; and subsidize coverage for people who can't easily afford it yet don't qualify for programs for the poor.


Although state experimentation is in favor now, one obstacle to state-by-state reform is a federal law, the Employee Retirement Income Security Act, or Erisa, that limits states' maneuvering room. It has thwarted an attempt by Maryland to force Wal-Mart Stores Inc. to offer health insurance to employees. This week, the Fourth U.S. Circuit Court of Appeals upheld an earlier decision that Maryland had violated Erisa. Legal experts said the decision could pose problems for states considering health-care changes but suggested that it wouldn't cripple efforts in states like Massachusetts, where the overhaul is broad and not targeted at a single employer.


Some veterans of health-care battles past smile at the enthusiasm for tackling the problem. Recalling high-profile press conferences of years past -- and proposals shredded by partisan politics or budget realities -- they say the most likely federal action is none of the above. There's also likely to be a big debate over health care in the coming presidential campaign.


But Mr. Stern, the union leader, thinks that view underestimates the current ground swell and unusual political opening. "I'm not sure Congress is yet recognizing the tidal wave that is building," he says. "It's the perfect time. You have an evenly divided Congress in Democratic control and a presidency in Republican control. You have everyone lined up on the side of universal coverage."


Doing nothing is costly too, says Henry Simmons, president of the National Coalition on Health Care, a collection of companies and interest groups that has agitated for major health-care change since 1990. "We can afford health-care reform," he says. "What we cannot afford is a continued failure to address the crisis in health care."


This Week in Health Care:




Who: Business Roundtable, Service Employees International Union, AARP

What: These unlikely allies launched a group called "Divided We Fail" and proclaimed that health care costs have gotten out of control. They said they plan to force lawmakers to begin confronting the issue of health care reform as we head towards the 2008 election.

Tidbit: The group got off to a rough start with a full-page ad in the Washington Post announcing the group somehow failing to include the word "Divided," leaving the ad to read simply: "We Fail"






Who: A bipartisan group of Senators and members of the House

What: Unveiled the "Health Partnership Act" which is aimed at providing grants to states that are crafting their own health care reform plans. Under the plan, Congress would create a State Health Innovation Commission to review and approve grants

Quote: "There is no single prescription to solving our nation's serious uninsured problem. Extending health care to the millions of Americans who are uninsured will require the innovation of governors and other leaders in all 50 states. Our legislation simply helps each state implement the solution that is right for them," said Sen. Jeff Bingaman, (D-NM), a sponsor of the bill.

Tidbit: The bill doesn't call for a specific amount of money to fund the program.




Who: Pennsylvania Gov. Edward Rendell

What: Became the latest governor to propose a plan to cover the state's uninsured residents

Quote: "We can no longer stand by while health care costs spiral out of control … It is no longer a question of whether we can afford to act – the cost of inaction is far greater; both in terms of individual health consequences and from the increasing burden on taxpayers," Mr. Rendell said.

Tidbit: The plan will phase in a mandate requiring health insurane for those with incomes more than 300% of the federal poverty level ($60,000 for a family of four) and require that full-time four-year college and grad students have coverage.




Who: Strange bedfellows including Families USA, the US. Chamber of Commerce and America's Health Insurance Plans

What: Announced a two-step approach to providing coverage to children and adults. The plan would use of mix of tax credits, subsidies and an expansion of existing federal programs aimed at low-income individuals.

Tidbit: Perhaps to signal how grandiose they view their plan, the group unveiled it in the cavernous foyer of Washington, D.C.'s Union Station.






Who: Sen. Ron Wyden (D-Oregon)

What: Introduced the Healthy Americans Act. The plan is to de-link health care from the employer-sponsored model and move towards a system where individuals purchase coverage and employers help foot the bill

Quote: "Americans really don't have health care at all. They have sick care," said Mr. Wyden. "We are going to change that. We are going to change that by giving seniors incentives to stay healthy, rewarding parents who enroll their youngsters in wellness programs and pushing private insurers to put a new emphasis on prevention and wellness in the plans they offer."

Tidbit: The plan has gained endorsements from Safeway CEO Steve Burd, as well as SEIU President Andy Stern.




---- Kris Maher contributed to this article.Write to Deborah Solomon at deborah.solomon@wsj.com7 and David Wessel at david.wessel@wsj.com8


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Bullet Points for Legislators

  • Single Payer saves money.  For the past 20 years, states have commissioned studies on different types of health care systems.   In EVERY case, single payer was shown to be the only way to cover everyone and the only system that saved money and controlled costs.

  • Publicly financed does not mean government run health care.  YOU have publicly finance health coverage, but the government does not make decisions regarding your health care.

  • Cost conscious patients often don't get the care they need.   Most decisions are made by the doctor in concert with the patient, but the patient relies on the doctor's knowledge to make a decision.  Expensive tests and treatments cannot be ordered by the patient, only the doctor.

  • Lifestyle choices are not what is fueling high costs in health care.   The United States ranks low in general health indicators, but high in good health habits.  We smoke less, drink less and consume less animal fat that many other countries with better health indicators and much lower health care costs.

  • Businesses can accurately determine their health care costs and are not subject to unanticipated large premium increases.

  • It will reduce labor costs due to a more efficient way of financing health care, eliminating much wasteful administration.

  • Workers' Compensation costs will be reduced, likely by half, due to the fact that everyone has health coverage and there is no need for the medical portion.

  • It reduces the need for part time employees and provides easier recruiting.  There are no pre-existing conditions or Cobra issues.

  • Eliminates the oversight of health benefits and bargaining health coverage with employees.

  • It creates healthier personnel and more stable employees, reduces absenteeism and eliminates employer health coverage complaints.

  • It reduces employee health related debt and personal bankruptcies.

  • It frees up family income that can be spent on other goods and services, thus stimulating the economy.

Tips for Writing Letters to Editor

Follow guidelines for your local paper (word count, submission instructions, etc.)

Frame your letter in relation to a recent news item Use state specific data whenever possible (let us know if you need help finding some!)

Address counter arguments

Be aware of your audience and emphasize how Medicare for All is good for ALL residents of the state

Criticize other positions, not people Include your credentials (especially if you work in the healthcare field)

Avoid jargon and abbreviations

Don’t overload on statistics and minor details

Cover only one or two points in a single letter

Avoid rambling and vagueness


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