What we’ve read in recent headlines was: 47 million Americans lack health insurance! Back on page 5, President Bush and Congress fight over reauthorizing the Children’s Health Insurance Program (SCHIP), which augments Medicaid coverage for children (and expires at the end of September). Looking at the data that produced the headlines makes it clearer how hard health reform is likely to be.
1. The coverage gap is widening fastest at upper incomes. Almost the entire increase in people without health insurance from 2005 to 2006 took place in families with incomes above $50,000 (median family income is $48,200). The number of uninsured people in families whose incomes were below $25,000 actually declined by about 4%.
Families with incomes above $50,000 a year account for an improbable 93% of the 2.1 million increase in the uninsured, and now represent 38% of the total uninsured in the United States. Two-thirds of the 2005-2006 increase was actually in families with incomes above $75,000! How far up into the middle class these incomes put someone obviously depends on where they live. In Manhattan, $75,000 a year is not a lot of money (consider that just parking your car, if you are foolish enough to own one, can cost $500 a month). In Topeka, Kansas, however, it’s upper middle class.
What we don’t know (and need to know) is exactly why nearly 18 million people whose families earn more than $50,000 a year lack health insurance. We can speculate that some of them are young, and have made what seems to them to be an intelligent gamble to “go bare” and spend the money on other things. Others not so young may be scrimping on health coverage in order to make their car payments, or to afford the suddenly more expensive jumbo mortgage payments on their homes, or cover their installment debt and energy bills. These data could indicate that worsening family cash flow is changing how the health benefit is viewed. The fact that relatively well-off households are having trouble remaining covered is deeply disturbing. It would be helpful to know more.
The average US household presently spends about 6% of its disposable household income on healthcare; the above average income household spends much less. In 2005, Americans spent about $250 billion out of pocket on health services and had another $190 billion taken out of their paychecks for health insurance premiums. In 2005, we spent a comparable amount, about $440 billion, on Christmas presents and about $470 billion on restaurants and fast food. How important is health coverage for middle and upper middle class households in their mix of spending priorities? However stressed financially, these families are not among the hundred neediest cases. How important it is to solve this problem with tax dollars will be discussed more below.Is it important enough to merit public subsidy?
2. Non-citizens are a large part of the uninsured population. One-quarter of the 47 million uninsured are foreign born, and over 10 million are not citizens. So the correct answer to the politically incorrect Trivial Pursuit question: “How many Americans are uninsured?” is a little less than 37 million (still too many, but . . .). When you look on a map at states that have the highest percentage of uninsured, you see essentially our southern border (California, Arizona, New Mexico, Texas, etc.). Even those who surmount the numerous hurdles and become legal citizens are statutorily ineligible for federally funded health benefits for five years (though some states cover them in the unmatched part of their medically indigent programs).
So a significant contribution to the large number of uninsured people is made by our immigration crisis, which broke numerous Congressional teeth earlier this year and didn’t get resolved. It is worth noting that the problem of covering immigrants is not unique to the U.S. It is a significant, though smaller, problem in every European country to which our health policies are unfavorably compared, including Britain, Spain, Germany, and Sweden. The legal restrictions on covering immigrants are not academic to our nation’s hospitals, who must treat people who present in their emergency rooms regardless of their status, thanks to EMTALA (the Emergency Medical Treatment and Active Labor Act), nor to community health centers and public health clinic systems, which treat people on the basis of need and ask citizenship questions later.
This is why candidate Romney’s disingenuous “let the states do it” health policy makes limited sense. However many states make it as far as Massachusetts’ highly evolved but still not universal health policy, it makes no sense whatever for each state to have its own immigration policy. That’s what we have a national government for. From a public health perspective, to ignore this population is to tolerate a gaping hole in our defense against pandemic flu and other emerging disease risks.
3. Aging Boomers are a surprisingly large part of the uninsured population. Almost one quarter of the 47 million uninsured are between the ages of 45 and 64. Despite the large reservoir of public sympathy for “the kids”, this older group of uninsured people may be the most expensive and scariest subpopulation because they are aging into the region of expensive chronic illnesses. Their emergency room visits are far more likely to be of the $25,000 variety and lead to hospital admissions. (A surprising 541,000 thousand people over age 65 lack health insurance, despite the smug assumption that we’ve achieved universal coverage for the elderly).
This older group of uninsured is bewilderingly diverse. It comprises homeless people, people who are widowed and divorced, laid off factory workers and computer programmers, free-agent knowledge workers, early retirees and those normal retirees whose companies either dropped retiree health coverage or went broke. (The disabled people in this age band are, of course, eligible for Medicare, though many do not enroll).
Mandating that these folks buy their own health insurance coverage, as “individual mandate” health policies such as Massachusetts’ require, poses three practical problems: the limited number of health insurers that will offer coverage to high-risk, older people; their pre-existing medical conditions (which are increasingly numerous as one ages); and the cost, which can easily exceed $2500 a month (if coverage is available at all). Even families with $120,000-a-year incomes would struggle to pay that type of premium out of pocket. For families at or below the median income of $48,000, realistically, it’s going to be impossible without public subsidy.
This is one reason why Massachusetts’ supposedly universal health plan exempted 60,000 people who could not afford even a “stripped-down” benefit. How many more “high-risk/high-need” uninsured people could have afforded Massachusetts’ health coverage if the state had seriously addressed its expensive health insurance mandates (requiring insurers operating in the state to cover chiropractors, in vitro fertilization, and breast reconstruction after cancer surgery, etc.) will be left to a future generation of doctoral students in health policy.
The obvious federal policy solution here was one proposed by unsuccessful 2004 Democratic Presidential candidate John Kerry: Extend Medicare coverage on a voluntary basis to those over 55. This could reach about 4.5 million of the group. For those with lower incomes, federal subsidies would be required. Do these subsidies make more public policy sense than covering children whose families make, say, $84,000 a year, as New York would like to do with its SCHIP program? That is what we allegedly have a Congress to help sort out.
The Bush Administration pre-veto rhetoric of “no socialized healthcare” (about the SCHIP expansion) would no doubt also rule out Medicare buy-in below age 65. And Congress rejected Bush-supported legislation to pre-empt state insurance mandates in order to help create a national (and electronic) market for health insurance coverage. Lots of luck, therefore, on finding a politically neutral solution for this population, which is probably the biggest dollar risk to both the society and the individuals involved.
Uninsured among children grew by almost 8%. According to Census estimates, more than 8.6 million children lack health insurance coverage. Children are the “high value” targets in the health care coverage debate, and the hostages in the present Congressional standoff over SCHIP. In a Democracy Corps poll earlier this year, over half of likely voters said they would be “much more likely” to support a Congressional candidate who advocated extending Medicaid/SCHIP to “all children”. That was double the number who support the perennial Kennedy proposal of “Medicare for All”, effectively a single-payer, government run health financing system. How could any sensible Congressperson running for re-election possibly vote against covering “all the kids”?
When one looks at the data, however, the rhetorical glow of this political “no-brainer” fades quickly. SCHIP presently allows states to cover children in families whose household incomes are double the federal poverty level for a family of four, or about $41 thousand a year. The state with the most successful SCHIP “marketing” program, Wisconsin, has been able to enroll only 72% of those eligible. Enrollment has lagged because states slacked on the marketing effort, because of federal funding caps in some years (while money has gone unspent in others) or because the parents didn’t know they were eligible, or because parents did know and did not want to enroll them for a variety of reasons (immigration status, self-reliance, etc.).
Urban Institute researchers Ken Finegold and Linda Giannarelli, who dove deep into the child health coverage data using the Institute’s TRIM 3 data model, found a messier and more complex picture. They found that the federal census data dramatically understates whether children are actually receiving public benefits. By adjusting for the actual enrollment data from state and federal health programs, they found that about 4.9 million children were uninsured for the entire calendar year (2003-4) — considerably fewer than the 8.7 million from the Census estimate.
Of this still formidable number, a little more than a million were eligible (for at least one month. . .) for either Medicaid or SCHIP, a far cry from the 5.5-6.5 million public figure Congressional Democrats have cited. This lower estimate was immediately seized upon by the Bush Administration, scrambling to justify an impending and politically damaging veto of a $50-60 billion SCHIP reauthorization bill (liberally larded with dubious earmarks for friendly interest groups) looming up from the Democratic Congress.
The Urban Institute researchers found that a larger number of children, about 1.1 million, were ineligible because of their immigration status (either outright undocumented or temporary work status), and another 400 thousand were children of legal aliens locked out of the programs because their families had not been not legal permanent residents for five years.
Of the remaining number, 2.2 million children were ineligible for SCHIP because their family incomes were higher than 200% of the federal poverty standard (roughly $41 thousand a year). This is the swampy ground on which the SCHIP reauthorization fight is being fought. The Democratic leadership wants to expand SCHIP eligibility to 300% of the poverty level (or around $62 thousand a year). Several states want to go higher. New Jersey wants to go to 350% (about $71 thousand a year) and New York to 400% (or almost $84 thousand a year). Even my staunchly left-wing, tree-hugging significant other raised her eyebrows when she heard these numbers.
Can Congress Set Priorities? So the debate in Congress right now is really about creating a much broadened, publicly subsidized health benefit for middle-class and upper-middle-class families. There’s a lot we don’t know about this population of families. But one thing we do know is that three-quarters of the families in the band between 200% and 300% of poverty already have private coverage. The availability of publicly funded health coverage would make it likely that employers will drop family coverage options, or raise the cost enough to force their workers to choose the public program option.
It is a legitimate public policy question whether we ought to be subsidizing childrens’ health coverage for families comfortably above the national median income of $48,000 a year. Again, that is why we have a Congress. But the question Congress ought to be asking is this: Is covering middle- or upper-middle-income children a better investment of scarce public dollars than, say, increasing funding for federally qualified community health centers (which funding Bush quietly doubled during his first six years in office) or increasing Medicaid payments to primary care physicians (who are retiring by the thousands or going broke taking care of publicly funded patients) or improving childhood immunization rates, or better financing children’s nutrition programs, or, for that matter, covering aging baby boomers who have lost their employer-sponsored health coverage? Let’s do have this debate, because it’s how the decision ought to be made. You cannot do this by debating SCHIP alone. It is a piece of a much larger and messier puzzle.
That isn’t going to happen, however, because the program expires at the end of the month. Sadly, the SCHIP reauthorization has devolved into a cynical maneuver by Congressional Democrats to force a reeling Bush White House to swallow the following headline: “BUSH VETOES HEALTH FUNDING FOR KIDS!” (How could he?). What a sad difference a decade has made. SCHIP was a bipartisan product of a lame-duck Clinton White House and Newt Gingrich’s Congress in 1997. Yes, these two bitterly feuding parties actually worked together a decade ago and created this program. And it’s done a lot of good. It surmounted Medicaid’s administrative and image problems and, along with a parallel expansion of Medicaid, provided coverage to 12 million children (and a million of their parents).
But in the present political climate, a reasonable modernization of SCHIP is no longer possible. And it isn’t just the Democrats who are the problem. Sorry, Wall Street Journal editorial staff, but SCHIP is not an entitlement program: Its funding is capped, there is no mandated benefit package, and states have impressive flexibility about who gets covered and when. Sorry, White House Press Office, SCHIP is not “socialized medicine” — the vast majority of coverage is actually provided by private health plans, just like the Part D drug coverage under Medicare you helped create in 2003. The overheated rhetoric will make finding a solution to the larger problem that much harder.
SCHIP was a product of the type of bipartisan collaboration that we will absolutely not see next year during a Presidential campaign, nor, I’m afraid, the following year, when the vicious partisanship of the current debate has been absorbed into the body politic. The political price of the damaging headline “BUSH VETOES HEALTH FUNDING FOR KIDS!” will be a far more caustic political climate in 2009 than we saw in 1997 — a scorched-earth atmosphere that will prevent a new Congress and President from seriously addressing the larger question of achieving universal health coverage.
Short of a Lyndon Johnson-style Democratic landslide, which isn’t in the cards, solving the problem will require the participation of Congresspeople from both political parties. How is this collaboration possible in a political climate filled with angry rhetoric and “go for the jugular” political maneuvering? The SCHIP authorization is, sadly, merely the warm-up for the 2008-09 debate. “Covering the kids” is actually the feel-good part of health reform. Our political system is well and truly broken, singularly lacking in statesmen of any political persuasion. And it isn’t fooling the voters, who have given both this White House and Congress record-low approval ratings. If politics as presently practiced in Washington continues, we will not have a just and affordable solution to this complex and vexing problem any time soon.