An Anemic Rate of Health Coverage

By DON LEE

July 4, 1999 12 AM PT

TIMES STAFF WRITER

Despite broad improvements in unemployment, crime and poverty in recent years, the Los Angeles area has slipped further behind the nation in one important measure of economic stability: the health insurance coverage rate of its work force.

Fewer than 60% of workers in Los Angeles County have medical coverage through their jobs, new studies show. That is the lowest among major U.S. metropolitan areas. Nationwide, 74% of workers rely on their jobs for insurance--a rate that has nudged higher this decade with the booming economy and tightening labor market.

But in Southern California, notably Los Angeles County, powerful forces have chipped away at the bedrock of the health insurance system, including a surge of small businesses, self-employment and low-wage jobs.

“If you work, you get insurance. That was the basic assumption,” said Dr. Susan Fleischman, director of medical services at the Venice Family Clinic, which has seen a near-tripling of patient visits since 1990, most of them people working one or two jobs. “That model is no longer true.”

The lack of job-based coverage is at the crux of the region’s health care crisis, which in many ways has worsened despite the strong economy and a billion-dollar federal waiver that rescued the county’s public health system in 1995. That five-year waiver, of federal rules in the way Medi-Cal funds are paid, has been crucial in delivering care to the uninsured. County officials have recently begun a push for an extension of the exemption, saying they desperately need it to keep the county’s six hospitals and network of clinics operating.

Even with the federal aid, the county is straining to keep up with the growing ranks of uninsured workers and their families. In all, about 2.8 million--or about 31% of the non-elderly population in Los Angeles County--are uninsured. And their woeful situation keeps spilling into emergency rooms, bankruptcy court and community clinics.

The county spent $80 million in emergency care for the uninsured in 1997, the latest fiscal year for which the data are available, up from $64 million in 1992. Places like the Venice clinic treat more clients, but they turn away more patients because of a lack of resources.

Left with few alternatives, many of those who are turned away delay treatment or forgo care, often leading to devastating physical and financial outcomes.

Not long ago, Juan T. Martinez, a 50-year-old diabetic who is uninsured, had an episode of vertigo in Gardena. The ambulance rushed him to Gardena Memorial Hospital, where he was treated and released later that day. He says he has not been able to pay the $3,000 hospital bill. His credit has been ruined, Martinez said, and he has given up dreams of ever buying a home.

It isn’t that Martinez doesn’t have a job. He has been working as a full-time bus driver for years. He says his company offers him insurance but at a cost to him of $350 a month. “I say, ‘No, I don’t want it,’ ” he said, adding with indignation: “What! You want my check for one week?”

Martinez is one of about 1.5 million workers in Los Angeles County who do not have health insurance. That represents one-third of all those employed. (Some workers without job-based coverage buy insurance on their own, and a tiny fraction qualify for Medi-Cal.) By contrast, 18% of workers nationwide are uninsured, 24% in all of California, according to new studies by UCLA health researchers.

Although the new research did not pinpoint job-based coverage for other Southern California areas, prior studies have indicated that residents’ coverage through employment in Orange, Ventura, Riverside and San Bernardino counties is closer to the national average.

Los Angeles is at the bottom. Among all metropolitan areas, only El Paso, a smaller city with a jobless rate near 10% and half the per capita income of Los Angeles County, has a lower job-based coverage rate.

“It’s more Darwinistic in Los Angeles,” said E. Richard Brown, director of UCLA’s Center for Health Policy Research and a leading authority on the issue. “It reflects a lack of social contract between businesses and workers in Los Angeles County.”

At The Times’ request, Brown and his colleagues at UCLA conducted the first detailed examination of Los Angeles County’s insured and uninsured work force population, using Census Bureau surveys taken primarily in 1997 and 1998. Although Los Angeles has traditionally had a more mobile, young work force with a big share of unskilled immigrants, the data suggest that the widening gap between the area and the nation in health coverage cuts across the work force. Among the findings:

* Regardless of pay, workers in Los Angeles County are far more likely to work for an employer that does not offer health insurance. Among those earning $190 to $380 a week, 49% of workers in Los Angeles County say their employer does not offer health benefits, versus 37% for California and 24% for the nation.

* Nationwide, two-thirds of workers with a high school education have employment-based health insurance. But it is only 49% in Los Angeles County.

* Nearly 40% of self-employed workers in Los Angeles County do not have insurance, compared to 29% nationwide, partly reflecting the large number of immigrant entrepreneurs in this region who forgo coverage.

* Only 42% of Latino workers in L.A. County are covered through their jobs, with a fraction of the rest buying insurance on their own or qualifying for Medi-Cal. The comparable job-based coverage for whites was 75%; for blacks, 73%; and for Asians, 58%.

* Across the categories of industry type, business size, immigration and marital and family status, a higher share of employees in the Los Angeles area work and live without health insurance. Even among union workers, those in Los Angeles had lower rates of coverage.

Analysts were stunned that the data showed no measurable progress in the health coverage rates of workers during a period of remarkable economic recovery in the Los Angeles area.

“You would expect health coverage to be increasing when the economy is booming,” said Lucien Wulsin, a Los Angeles attorney specializing in health law and policy. Until fairly recently, he said, health insurance premiums have been under control; moreover, insurance reform and the development of insurance pools for small businesses have made it easier and cheaper to buy health insurance.

“There’s something very wrong with the picture,” said Wulsin, who serves as a special counsel to California’s Small Business Assn.

Trend Has Profound Repercussions

The erosion of employer support for insurance has had profound repercussions for workers and their families. Tom Buchmueller, a UC Irvine assistant professor, has found evidence of stay-at-home moms entering the labor force to secure health insurance for their families because their husbands’ jobs don’t provide coverage.

That is precisely what Long Beach construction worker Rob Fisher sees among many of his colleagues. Fisher, who is 36 and single, does not have insurance. He says he would jump at the chance if his employer offered it.

Fisher’s employer, Bob Halderman, says it is tough for him to provide health benefits for his four workers. “It kind of gets down to bare bones for a little company like ours,” he said, adding that he himself is covered only through his wife’s job at a retail store. She doesn’t make much, he said, “but she likes the coverage.”

Employer-provided health insurance is more affordable to people because they receive group rates for coverage. Plus, workers don’t pay taxes on their share of the premiums.

But construction has the lowest job-based coverage rate among major nonfarm industries, partly because of high turnover and seasonality of work. That coverage rate is particularly poor in Los Angeles County--just 39%, contrasted with nearly 60% nationally.

Los Angeles County’s swelling uninsured work force can be traced partly to the shift in the region’s economic and industrial base.

The early ‘90s eliminated tens of thousands of jobs at giant banks and aerospace companies. The recovery has not recouped all the job losses, but in recent years the Los Angeles area has added employment through small businesses at a rate far greater than the rest of the nation.

More than 72% of all county workers are employed at businesses with fewer than 250 workers, up from less than 70% at the start of the decade, according to Regional Financial Associates, an economic research firm. And small businesses traditionally have been less likely to offer insurance.

In Los Angeles County, only about a third of workers at businesses with fewer than 10 employees have insurance through their jobs, according to the UCLA study. That coverage rate rises progressively with firm size, to more than 50% for those at businesses with 25 to 99 workers, to nearly 80% at companies employing 500 or more.

“Small firms are the key to the ‘great American job machine’. . . . Yet this source of economic opportunity and growth is also the Achilles’ heel of America’s employer-based health insurance system,” said a February report by the Henry J. Kaiser Family Foundation. The study found evidence that fewer small firms nationwideoffer health insurance now because of the increase in health premiums, but also because of other factors.

For Los Angeles, the higher uninsured rate also stems from its big share of immigrants.

Latino immigrants are much more likely to work for small firms, and many of them are in low-skilled jobs that are less likely to provide insurance. Asian Americans, meanwhile, tend to have higher self-employment rates, which contributes to their lower coverage.

According to government surveys, about a third of the 330,000 increase in employment in the county between 1995 and 1998 constitutes those who are self-employed or work for family and other non-payroll employers. At the same time, many of the payroll jobs that have been created in recent years are in low-wage industries.

Retailers and wholesalers in the county have added almost 40,000 jobs from 1995 to 1998. The job-based insurance coverage rate for those workers: 47% in retail and 61% in the wholesale trade. Construction and manufacturers such as furniture and garment makers have added thousands of jobs in recent years, but most do not offer health benefits.

Jackie Bender, owner of JB’s Private Label, a downtown knitwear contractor, says she wishes she could afford it. Bender believes that it would boost productivity. Last winter she gave her 26 workers flu shots and absenteeism dropped markedly. Bender provides seven holidays off with pay, plus vacation. But she says health insurance would add $25,000 a year in expenses. That’s even more than she pays for rent for her shop on Broadway.

“The bottom line is that the premium costs are prohibitive,” she said.

One of Bender’s workers, Susanna Dominguez, badly wants insurance. Her husband works as a truck driver, but his firm doesn’t offer insurance either. She earns $10 an hour. “I don’t know whether I can pay, but I worry for a long time about not having insurance. Somebody can get sick.”

Among major industries, the two with the highest rate of insurance coverage are government in Los Angeles County and transportation/utilities, at 85% and 73% respectively. But government employment has barely budged, although the transportation sector has added about 20,000 jobs between 1995 and 1998 in the county.

Over those three years, the business-services category in the county has produced a net 50,000 new jobs--more than any other classification. About 11,000 of these have been in computer services and processing, but personnel-supply firms accounted for 17,000 jobs, and these generally do not come with employer-paid health benefits. The average salaries for these two industries’ workers: about $57,000 for computer services and $17,500 for temporary help firms, according to state payroll data.

“Over time, the work force has become more and more segregated by incomes,” said Jon Gabel, vice president of Health Systems Studies, a nonprofit research organization and one of the authors of the Kaiser report.

“A lot of the long-run decline in health coverage, I think, is due to the deteriorating position of unskilled workers,” he said, noting that inflation-adjusted incomes of low-wage workers have fallen further behind other workers this decade, although they have recently begun to rise. “Uninsurance and income inequality are one and inseparable,” he said.

Disqualified for Aid by Higher Incomes

Indeed, in a separate report published earlier this year, UCLA researchers said California’s large Southeast Asian population has seen a sharp increase in the uninsured rate. A big factor, they said, was that many of them found work as the economy improved, but most of the new jobs were part time and seasonal and did not offer insurance. But because they had higher incomes than before, many could not qualify for Medi-Cal.

The disparity between Latinos and other workers in health coverage appears to be widening in this region, as it is throughout the nation. Although cultural factors and lack of familiarity contribute to Latinos’ low coverage rate, experts say the principal factor is their lack of job-based insurance.

Because many work in low-wage industries, even when they are offered insurance partially paid by employers, some will decline because it is too expensive. For example, at service firms with 10 to 24 employees throughout the country, only 61% of workers took up the offer in 1996. That was down from 80% in 1989.

“We need to recognize the transition going on,” said Manuel Pastor, chairman of Latino studies at UC Santa Cruz.

“It’s going to slow down the economy and put a dent in the middle class,” Pastor said at a recent conference in Los Angeles on changing demographics and workers’ health, sponsored by the California Wellness Foundation.

Sick People Turned Away

In many ways, the dangers have already surfaced.

At the Venice Family Clinic, officials say the prosperous economy in recent years has helped them raise more private funds to enlarge the clinic’s facilities and hire additional doctors and nurses. Still, the clinic’s main center, on Rose and 6th streets, is turning away more patients than ever--40 sick adults a day.

Exactly what happens to them, and hundreds of others who are turned away by other clinics every day, is unknown.

Dr. Earl Rubell, a longtime pediatrician and volunteer at the Venice clinic, can only imagine from the patients whom he does see. And that is a grim picture.

On a recent afternoon, he grimaced when he looked through a 10-year-old girl’s charts. In it, he found that she had missed shots for chickenpox, hepatitis, tuberculosis and diphtheria.

“She got today what she should have had as an infant,” he said, his voice rising with anger. Then, as his face grew more weary than mad, he said, “This is fairly common.”

The girl’s mother, Bertha Rodriguez, had the look of resignation. Her husband, she said in an interview, has been working at a restaurant in Marina del Rey for 15 years. But his employer will not help him get insurance, she said.

“I think they should pay for it,” she complained softly. “He has been there for a long time.”

* THE CULTURE FACTOR: Cost aside, many employers do not provide health insurance because of cultural barriers. C1

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How L.A. County Compares

Medical coverage through one’s job is the core of America’s health insurance system. But workers in Los Angeles County do not fare as well as those elsewhere.

% of workers with job-based coverage:

L.A. County: 59%

California: 66%

U.S.: 74%

% of all workers whose employer doesn’t offer it:

L.A. County: 30%

California: 21%

U.S.: 15%

% with full-time, full-year jobs covered by employer:

L.A. County: 65%

California: 73%

U.S.: 80%