By John Dorschner, The Miami Herald Knight Ridder/Tribune Business News
Jan. 30--While Congress keeps debating about medical coverage for the newly unemployed, Nivea Morales of Hialeah has come up with her own solution: 'I take a lot of vitamins. I work out. And I pray to God I don't get sick.'
Laid off from her job as a customer service supervisor for Norwegian Cruise Line in October, Morales rejected the COBRA option, which would have allowed her to continue her group policy for herself and her 20-year-old son -- at a cost of $350 a month.
'That's a third of my unemployment check. I just couldn't do it. It was either pay the insurance or eat.'
At least a million people have lost their health insurance since the recession began last year -- making some 40 million who have no medical protection. The National Coalition on Health Care predicts that rising premiums, firms cutting costs and growing unemployment might cause the ranks of the uninsured to swell by several million more by the end of this year.
Both Republicans and Democrats agree that this is a dreadful situation that needs to be changed. But their proposed solutions are so far apart that health insurance was a major reason why the economic stimulus package stalled in Congress before the Christmas break -- and remains a major stumbling block after the House and the Senate went back into session on Wednesday.
'There are huge philosophical differences,' says Gail Shearer, healthcare specialist for Consumer's Union.
The Republicans want to give the unemployed tax credits for up to 60 percent of an insurance premium. The Democrats prefer expanding Medicaid or giving direct cash payments for 75 percent of the costs of the jobless continuing their employers' coverage through COBRA, the Consolidated Omnibus Budget Reconciliation Act of 1985.
The Republicans, standing firmly behind the program of the American Medical Association, view the current debate as a chance to fix the healthcare mess that has been building for years.
'This has an opportunity to head in a new direction,' says Dr. Richard F. Corlin, AMA president. 'We think that's important.'
Under the new battle lines, positions have changed dramatically since Hillary and Bill Clinton were portrayed as healthcare revolutionaries in 1993 by proposing a guaranteed health insurance for all Americans.
This time around, Republicans and the AMA are accused of seeking to radically transform healthcare, while the Democrats are declaring themselves the defenders of the present system in which two-thirds of nonelderly Americans have health-insurance provided by their employers.
Virtually all Americans agree that something must be done. In an October survey of 803 persons by Lake Snell Perry, 94 percent of Democrats and 90 percent of Republicans said laid-off workers needed financial support to get health coverage.
Focus groups organized by the Social Policy Research Institute showed that most Americans believe providing health insurance is 'right thing to do.' Republicans, in particular, sense that 'a rapidly changing economy means anyone can lose insurance.'
Many Americans also understand that providing insurance can be 'cheaper in the long run.' A survey of 3,500 adults by the Commonwealth Fund found that 54 percent of the uninsured said they went without needed healthcare during the past year.
The Kaiser Family Foundation points out that the uninsured 'are less likely to get preventive care, mammograms, prostate cancer tests and flu shots. They are more likely to be admitted to the hospital for problems that could have been avoided if they had seen a doctor earlier.'
Employees laid off by firms that have more than 20 employees are entitled to keep their insurance through COBRA provisions, but they must pay the share that their employers previously paid. Surveys show that works out to a national average of $2,650 a year for an individual and $7,053 for a family -- rates so high that four of five eligible ex-employees, like Nivea Morales, decide COBRA cost too much.
'COBRA is always too expensive,' says Morales. 'I was an Eastern Airlines casuality years ago, and COBRA was too expensive then, too. I had to turn it down.'
For the unemployed not protected by COBRA, the Democrats are proposing an expansion of Medicaid.
Republicans complain that supporting COBRA and Medicaid is simply continuing the present problem-ridden system.
Congressional Republicans and President Bush want tax credits for the jobless who buy insurance on their own. Low-income employees who pay little or no taxes would get a check from the government -- to be used only to purchase insurance. The credits would be inversely related to income, so that the poor would receive the most credit.
This proposal fits, as stated in an AMA pamphlet, 'the AMA's long-range policy goal of transforming the country's healthcare from a system that is primarily responsive to employers, to one that is primarily responsive to patients.'
The AMA believes this would lead to a free-market approach in which individuals would have far more choices than they do under their present employer-sponsored insurance.
'In many ways,' says the AMA in a pamphlet, 'the failure of the employment-based system to ensure health insurance coverage is related to the cost-cutting techniques of managed care. Many managed care practices have created a strong public outcry.'
Diane Rowland of Kaiser believes that the AMA's program is designed to remove power from the managed-care insurance organizations, which have been forcing doctors to lower prices in order to remain in networks.
The AMA maintains that the present system subsidizes employer-based coverage. 'Let's say a worker gets healthcare insurance worth $3,000, of which $2,500 is paid for by the employer,' says Corlin. 'That $2,500 is an employer expense, but it's not counted as income for the worker.'
Under the AMA's long-range proposals, that $2,500 would become income -- and then treated as a tax credit if the worker purchased insurance on his own.
'This sets off alarm bells in our heads,' says Shearer of the Consumer's Union. 'The employer-based system spreads the risk across the healthy and the sick. Surveys show that sick people have a very hard time getting insurance on their own or have to pay a very high premium. The national average shows 10 percent of people account for 70 percent of healthcare costs. We need a system to provide affordable coverage for those sick people.'
'This is a philosophical divide,' says Judy Waxman of Families USA, a supporter of Democratic proposals. 'The AMA sees this as an opportunity to dismantle the employer-based system. We prefer to shore up employer coverage.'
Corlin acknowledges that the very sick could be a problem. 'We need to take a pragmatic approach and set up a system that works for most people.' For the medically needy who can't get traditional coverage, the AMA proposes setting up special insurance pools.
A second problem is negotiated cost.
A healthy 55-year-old woman pays $4,700 now for a standard preferred-provider policy, according to Families USA. Prices like that mean 71 percent of those who shop for an individual policy decide they can't afford one, reports the Commonwealth Fund.
What's more, individuals outside managed-care networks could expect to pay considerably higher rates that those in employer-based managed-care groups. The AMA recognizes that this could be a problem and says individuals could join new, non-employer groups, possibly connected with unions, churches or neighborhoods.
Corlin says the AMA plan may be endangered by the same problem that other reforms have encountered. 'The reason why they all fail -- why the Clinton proposals failed -- is that they scare people who are comfortable with their health insurance. They don't want their coverage disturbed.'
Corlin says the tax credit plan allows persons to still chose an employer-based system, but many people are suspicious. Two-thirds of the 3,500 interviewed in the Commonwealth study last summer stated they preferred employer-based insurance over tax credits.
At the moment, lobbyists on both sides are seeing no hint of compromise.
'We're in a waiting period,' says Rowland, who maintains Congressional contacts for the Kaiser Family Foundation.
'Maybe after the State of the Union next Tuesday, we'll see some movement, but right now I'm hearing nothing.'
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(c) 2002, The Miami Herald. Distributed by Knight Ridder/Tribune Business News.
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