Working Without a Net : Health insurance: Coverage has become a crucial factor in middle-class families’ budgets, affecting lives and sometimes derailing careers.
It’s been happening to poor people forever. In recent years, it’s even been happening to people who work for small companies with marginal health care plans. But a solidly middle-class person like Susan Halpern never thought that it would happen to her.
Along with her husband and their two daughters, Halpern (who asked to be described by her maiden name to avoid drawing undue attention to the family predicament) lives in a nice house with a new kitchen and a back yard pool on a quiet street in Van Nuys. Her husband makes $50,000 a year working for a company that offers health insurance for the entire family. At least it did until 18 months ago. That’s when the company changed hands and the new owner announced that he could no longer afford to cover dependents.
Halpern was terrified. “I had too many problems,” she says. “I can’t go without health insurance. It scares me to death.”
Initially, Halpern tried looking for other insurance, but she had a pre-existing condition--a chronic sinus infection. And no one would take her. To cope with the cost of the dependent coverage, which started out at $420 a month and eventually rose to $835, Halpern tried to cut costs elsewhere, refinancing the house, juggling bills, limiting her daughter’s preschool to three days a week, letting slide the Mommy and Me classes and forgoing car repairs. She started clipping supermarket coupons, switched from chicken to pork and limited her clothes-buying to T-shirts.
And in the end, she still couldn’t make it. “It’s devastating to let them take out $800 a month,” Halpern says. “It was like supporting another family.”
In December, Halpern and her husband missed a $1,500 mortgage payment. Now they are losing their house. Her marriage is in jeopardy and the stress has given her an ulcer.
And that’s another thing, Halpern says. The last time she went to the pharmacy, she had to pay for her own ulcer drugs. “My medicine costs $70 for a 10-day supply, and I haven’t met my deductible yet.”
Halpern isn’t the only one devastated by a health insurance problem.
“Our health care system is in crisis, bordering on chaos,” former U. S. Surgeon General C. Everett Koop says.
Twenty years ago, health insurance was a small annoyance and minor worry, on a par in most peoples’ lives with getting the car registered or the cat spayed.
But in the last few years, health insurance has become the 800-pound gorilla of the middle-class family budget. It affects peoples’ lives and derails their careers. People who already have health insurance worry that they will lose their jobs or be laid off. People who don’t have it live in constant fear that a family member will have an illness or major accident that will chew up a lifetime’s worth of savings in just a few weeks. Perhaps as many as one-third of all people say they are hanging onto jobs they’d otherwise leave, solely for the health care.
Barry Glassner, a USC sociologist who is writing a book on the midlife career crises of baby boomers, says he knows couples who “literally cannot sleep at night because one or the other of them is preoccupied with visions of what is going to happen when one of their children falls off the jungle gym at school because they don’t have insurance any more.”
“There is not a day that goes by that I don’t worry about my health insurance,” says Rhory Kadish, who with her sister runs My Mother’s Knish in Westlake Village. “I’m a strong person with a lot of self-esteem, but I’m nervous and I’m scared. Sometimes it is hard to get out of bed in the morning just from the stress.”
“The meaning of insurance goes far beyond insurance itself,” Cal State Northridge psychologist Richard Docter says. In modern society, the only security that some people have is their job and the health insurance that comes with it. So when people are fired, laid off or unable to qualify for health insurance, their whole being is fundamentally threatened. They lose the feeling that “someone is looking after me.”
And the truth increasingly is that no one is. In the San Fernando Valley, estimates Van Nuys insurance broker and financial planner Rob Piscitello, 25% of the population lacks health insurance. The primary reason is cost. In Los Angeles, health insurance costs are the highest in the nation, costing small employers an average of $631 a month for a family of four, compared with a national average of $365, according to a national survey by Milliman & Robertson, a New York actuarial firm. Furthermore, over the last four years, insurance premiums for typical unmanaged programs have been escalating about 20% a year, says Jacque Sokolov, medical director for Southern California Edison.
For self-employed people with pre-existing conditions, insurance premiums have gone up a lot faster than that. One financial consultant with diabetes who doesn’t want his name or hometown mentioned for fear that it could compromise his position with his employer, says that when he quit his previous job to strike out on his own, the cost of private health insurance for himself and his wife “doubled every three months.” By the time it hit $16,000 a year, it “just about equaled the amount I was netting.” So he had to drop his business and go to work for a government agency “just for the medical insurance” to cover his diabetes.
Kadish says she cried for an hour straight when in the wake of a mastectomy three years ago her premiums jumped from $350 a month to $1,200 month. “When I was on chemotherapy, I had to take a part-time job to pay the insurance,” Kadish says. “And this was on top of the 60 or 70 hours a week I was already working in my own business.”
The problem isn’t only that the cost is going up. The coverage is steadily going down. “Fifteen or 20 years ago,” Piscitello says, “you could buy policies with $25 or $50 deductibles that would pay 100% of expenses. Now the most common policies are $500 deductible, and they only pay 80% after that.”
In an attempt to hold down the cost, self-employed people are buying policies with $1,000 deductibles or even higher. (Jay Thorwaldson of the Palo Alto Medical Foundation says he knows of one case where a self-employed artist bought a policy with a $35,000 deductible.)
Carole Valleskey, a former dancer with the Joffrey Ballet, says she sometimes fantasizes about returning to Switzerland just for the pregnancy coverage. “In this country, when a dancer gets pregnant,” Valleskey says, “you can’t dance, you can’t get paid and you don’t get health insurance. In Switzerland, you are allowed to get pregnancy leave, you continue to get paid, you get a week in the hospital. They will send a nurse home if you need it. All prenatal care is covered. There are free classes on nutrition and breast-feeding. Everyone I know who is a dancer stays over there to have their kids.”
Although doctors, hospitals and insurance companies are most often blamed for the high cost of health insurance, consumers are part of the problem too.
“As Americans, we want and demand the best care in the world,” Piscitello says. “We want that. We demand it. But it is getting harder and harder for us to pay for it. Ten years ago, they didn’t even have a MRI (magnetic resonance imaging) test. Now they do them like they used to take X-rays. That’s a $1,000 ticket. If you had said to me 10 or 15 years ago that there is going to be a medical test that costs $1,000, I wouldn’t have believed it. I couldn’t have fathomed the thought.”
Another reason, says Mark Weinberg, executive vice president of Blue Cross of California, Woodland Hills, is nobody wants to make tough decisions about how best to allocate health care resources. As a result, huge amounts of money are being spent, often without much benefit, on severely underweight babies or terminally ill people “in the last six months of their lives.”
In the meantime, people who lose their jobs and therefore, in many instances, their health insurance find themselves turned into indigents overnight.
“The problem was really brought home to me” the night of the President’s State of the Union address, says Jon Goodman, director of the Entrepreneur Program at the USC Business School. Goodman was answering phone calls on a CBS call-in show after the speech. “Over half the calls were from people who formerly had health insurance and a reasonable middle-class life and then been laid off and gotten a health problem. They had lost their houses, lost everything and were facing financial ruin.”
“It’s crazy, totally out of hand,” says the financial consultant who took a government job just for the health insurance. “It’s like funny money when it comes to medicine”--the doctors are overpaid; the hospitals overcharge.
And insurance companies, says Maryann O’Sullivan, executive director of Health Access, a statewide consumer coalition for affordable health care, try to hold their costs down by keeping out anyone “who they think might use the coverage.”
Even doctors, who presumably have the income to handle it, are appalled by the high cost. If he were to be knifed on Vanowen Street, Van Nuys dermatologist Robert Hartman says, he would be terrified to go to a hospital. “You end up in intensive care and you come out with a bill for $100,000. And I get free doctor care.”
Forget your house; forget hoping to have anything. If you ever get caught without health insurance, you’re in big trouble, Halpern says. “One illness and you can be wiped out.”
When she was last pregnant, Halpern developed a kidney stone. “I was in the hospital for six hours” (for lithotripsy--a sonic method of crushing kidney stones), she says. “The cost was $16,000. I called the hospital; ‘This is a mistake, right?’ ”
When Valleskey, the former dancer, had a miscarriage in December, she ended up with a $6,000 hospital bill for one night’s stay. “The bill was nine pages,” says Valleskey, including $14 for four ounces of mouthwash and $17 for a 15-cent sanitary pad. “This is like the defense industry with these $500 screwdrivers.”
Hospitals readily concede that their prices are out of control. But, says Dave Langness, vice president of the Hospital Council of Southern California, there’s a good reason: 25% of the people who use hospitals in Los Angeles have no insurance; another 54% are Medicare or Medi-Cal patients whose payments are fixed by the government.
That leaves 21% of the people who do have private insurance to pay not only for themselves but also for people who neither have insurance nor the ability to pay their own bills, plus the 40% of the Medi-Cal patient costs not picked up by the government. “We subsidize people who are poor by tacking on their costs to people who are not poor,” Langness says.
Although the present health insurance system was originally designed to cover the costs of unexpected major illnesses (as opposed to pay for routine care), there are signs that it doesn’t even always do that anymore.
Television writer Catherine Clinch had good coverage with the Writers Guild health insurance plan, but when her newborn baby came down with severe medical problems, it devastated the family budget anyway. Although most of the expenses were covered (about $1.1 million over the last five years), coping with the uncovered portion at one point forced the family to sell some of their furniture to pay the rent. “We came close to being homeless,” Clinch says.
During the worst part, Clinch says, she was afraid to answer the telephone for fear that she would have to explain herself to yet another bill collector. “People would call us 6 o’clock Sunday morning--’You owe the doctor $300.’ They call you in the middle of the night for $78. When you’re one payment late on your bills, they cancel your credit, badger you, treat you like a deadbeat who went out buying fancy clothes--’I don’t care what your problem is, lady. You owe us 32 bucks.’ ” At times, Clinch would just let the phone ring and ring until she discovered that she had the legal right to make them stop.
In an effort to reduce expenses, most insurance companies have become increasingly vigilant about pre-existing conditions.
“In the past, insurance companies used to worry about cancer or heart disease,” O’Sullivan says. “Now they are worried about backaches and headaches, alcoholism and psychiatric care.”
It’s gotten so bad that some occupations are regarded as pre-existing conditions. “Lawyers have hard times getting health insurance because they are more likely to sue,” says Wally Zelman, special deputy for health insurance issues for state Insurance Commissioner John Garamendi. “Florists, interior designers and hair stylists have problems because people assume they are disproportionately gay.”
An increasingly frustrating side effect to the health insurance crisis is the pressure that it exerts to keep people in jobs they long ago outgrew or frankly dislike but can’t leave for fear of losing their insurance. According to a New York Times/CBS poll last year, three out of 10 Americans said they were keeping their jobs mainly for the health care benefits.
It’s not only depressing for the employee, it’s bad for business all around. “Imagine the loss of efficiency and enthusiasm,” Zelman says.
The notion that anyone would hang onto a job he doesn’t like simply to get health benefits seems absolutely absurd to a European, O’Sullivan says. It is also quite dispiriting to a generation of Americans raised on the idea that their lifework should be a source of pride and joy.
“Joseph Campbell said you have to follow your bliss,” O’Sullivan says. “But you can’t follow your bliss if you are worried about health insurance.”
Health Insurance Costs
Map shows the average monthly premium per employee for small companies in 1991 for selected cities.
The figures are from Milliman & Robertson, who asked 16 large health insurers to estimate costs in various cities for a policy covering a small company of 45 employees. The theoretical policy carried a $100 deductible, paid 80% of expenses and covered hospitalization, surgery, doctor’s office visits, radiology, lab tests and prescription drugs.
The monthly tab of $631 for Los Angeles was the average for all employees in the model company surveyed, including single people and employees with dependents.
The study looked at insurance costs for small businesses, which are generally higher than those for large firms. But Los Angeles usually is at or near the top of the list of most expensive cities for large corporations, too.
Los Angeles: $631
Denver: $347
Seattle: $310
Dallas: $391
Minneapolis: $321
Chicago: $427
New York: $507
Boston: $416
Washington: $445
Atlanta: $387
Miami: $620
U.S. Average: $365
