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Original article URL: http://bridgemi.com/2013/02/job-based-health-coverage-plummets/

Quality of life

Job-based health coverage plummets

Linda and Ken Brauer went years without health insurance after Ken lost his job as a salesman in 2007.

Ken became eligible for Medicare in January. But Linda, a 63-year-old unemployed social worker with a master’s degree, has been unable to find work and still lacks health insurance.

“People are just so vulnerable,” said Linda Brauer, who lives with her husband in Rockford, north of Grand Rapids. “Unless this has happened to them, I don’t think they understand it.”

But Brauer is far from alone. Nearly 1.6 million Michigan residents lost coverage from employer-sponsored health insurance plans between 2000 and 2011 — more people than in any other state — according to a recent study by the Economic Policy Institute in Washington, D.C.

California ranked second with 1.5 million of that state’s residents losing employer-sponsored coverage during the past decade. But California has nearly four times Michigan’s population of 9.9 million people.

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In addition to the impact on workers and their families who lose employer-provided insurance, experts say the economy also suffers as poverty rises and workers pay a bigger percentage of the family budget on health insurance.

Michigan once ranked among the best states for having jobs that provided health insurance by employers. But the state has fallen far from that perch during a decade in which employers shed about 850,000 jobs and the benefits that went with them.

In 2000, 82.6 percent of Michigan adults and 75.9 percent of those under the age of 18 received coverage from employer-sponsored health insurance plans, according to the EPI study.

By 2011, those percentages had fallen to 70.1 percent and 60.1 percent, respectively.

“Michigan still has higher percentage of people covered by employer-sponsored plans than the national average,” said Elise Gould, author of the EPI study. “It’s just that Michigan started out so much better. Now it looks like a middling state.”

Nationwide, 58.5 percent of adults and 68.4 percent of children were covered by employer-sponsored health insurance in 2011.

Health costs challenge family budgets

Trying to pay for health insurance after a job loss can be a daunting task. The average premium for single coverage in an employer-sponsored plan last year was $5,615 and $15,745 for family coverage.

The cost for people purchasing their own insurance can be even higher, prompting many to go without coverage and hope they don’t become seriously ill.

“Any of us can be one tumor away from a health-care disaster,” said Jan Hudson, a senior policy analyst at the Michigan League for Public Policy.

One family’s trip from insured to struggling

Linda and Ken Brauer have struggled to cover medical bills since the family lost its health insurance in the wake of Ken Brauer’s job loss in 2007. (Bridge photo/Lance Wynn)

Linda Brauer said she and her husband depleted their savings in paying for more than $18,000 in federal COBRA health insurance coverage for 18 months after Ken Brauer lost his job.

In order to make ends meet, the Brauers each took early Social Security retirement payments when they reached age 62, refinanced their home under a federal program that lowered their monthly payments and went on food stamps.

“It was horrifying,” Linda Brauer said. “You just don’t tell your friends and relatives. There is so much of a stigma about not pulling your own weight. You’d rather pay your fair share if you could.”

Linda Brauer has been out of the work force for decades, first as a stay-at-home mom and later as caretaker to an adult son with cancer and an ailing father, who died in 2008.

She said he has been looking for a job with health insurance benefits since then, but has had no luck.

Her husband was recently hospitalized with a heart ailment, a condition Linda Brauer said likely was aggravated because the couple couldn’t afford regular check-ups after they lost health insurance.

“It does not save money to leave people uninsured,” she said. “We should not be more concerned about putting companies at risk than the lives of our fellow citizens.”

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The huge increase in the number of Michigan residents who have lost health insurance through their employers is mainly a result of the state’s dramatic job loss, particularly in the auto industry, which has traditionally offered excellent benefits.

But there are other factors, including employers dropping coverage for workers or eliminating benefits for dependents of employees.

Still others have shifted so much of the cost of insurance to their employees that they don’t take the coverage offered, Hudson said.

“Employers can offer coverage but make it awfully difficult for their employees to afford it,” she said. “It’s an enormously complex issue.”

According to the Kaiser Family Foundation, Michigan firms are slightly more likely than those around the nation to offer health plans, though the offerings are heavily influenced by the size of the firm.

For example, while 98.3 percent of firms with at least 50 employees had health insurance, only 36.9 percent of those with fewer than 50 workers offered a plan. Overall, 52 percent of Michigan firms offered a health plan — again a figure slightly above the national average.

Business groups say it is increasingly difficult for businesses to provide the benefit when costs continue to escalate.

“Most businesses try to offer health insurance as a way to attract and maintain good workers,” said Wendy Block, director of health policy at the Michigan Chamber of Commerce. “Employers cannot afford double-digit increases year after year.”

Businesses also are bracing for major changes under the Affordable Care Act that kick in next year.

“This year is going to be pretty much business as usual, meaning health care costs will rise three-to-four-times inflation,” said Scott Lyon, senior vice president at the Small Business Association of Michigan. “But it’s going to be a really different marketplace in 2014.”

Businesses with more than 50 workers will be required to offer health insurance coverage to workers or pay a fine.

Small businesses and individuals will be able to purchase insurance through health insurance exchanges in each state, although many details about those exchanges have yet to be finalized.

Snyder backs Medicaid expansion

Some say Michigan could boost its number of insured citizens by hundreds of thousands through a voluntary Medicaid expansion, which would be paid mostly by the federal government.

Gov. Rick Snyder has asked the Legislature to approve the expansion, a decision that was cheered by groups pushing to get more Michigan residents covered by health insurance.

Under the Affordable Care Act, the federal government would pay the cost of covering families who earn up to 133 percent of the federal poverty line until 2016 and 90 percent of the cost until 2020. Most of Michigan’s 1.2 million uninsured residents earn under 139 percent of the federal poverty line, reports the Kaiser Family Foundation.

Many Republican lawmakers are wary of expanding Medicaid, fearing that the state could eventually be tagged for much of the cost.

But a recent study by the Center for Healthcare Research & Transformation at the University of Michigan found the expansion would provide coverage to as many as 600,000 uninsured and save the state nearly $1 billion in Medicaid costs over 10 years.

Many of those would be covered work in small businesses that can’t afford to offer health insurance to their employees, experts said.

“If you’re a small business, you want employees to have health care,” said Don Hazaert, director of Michigan Consumers for Healthcare. “Why wouldn’t you want this?”

SBAM has decided to support the Medicaid expansion. Block said the state chamber is still studying the issue.

Michigan’s economy is improving, which means that more of Michigan’s 413,000 unemployed workers will find jobs and get health insurance coverage from employers, said Gould of the Economic Policy Institute.

Meanwhile, Linda Brauer is hoping she will not incur any major medical expenses until she becomes eligible for Medicare insurance coverage next year.

“I just say my prayers,” she said.

Rick Haglund has had a distinguished career covering Michigan business, economics and government at newspapers throughout the state. Most recently, at Booth Newspapers he wrote a statewide business column and was one of only three such columnists in Michigan. He also covered the auto industry and Michigan’s economy extensively.

7 comments from Bridge readers.Add mine!

  1. Jan Wagner

    neither my husband nor I are eligible for medicare yet (ages 61 & 63). we had a family owned business that was unable to compete during the recession years and we lost jobs and health coverage. We used our retirement funds to live on, and when our2 yr. old Grandson came to live with us we qualified for medicaid under poverty guidelines as caretakers of a young child. We too began drawing early social security as we had spent our 401 K and husbands health prevented him from full time construction. After 4 years we adopted our GS, he too became eligible for a portion of husbands ss. But, because we have the income-we are no longer eligible for medicaid. A real catch 22! The income is not nearly enough to pay morgage, living expenses, home & car maintenance while raising a young child if we also have to pay for our health care or health coverage. We need to take care of ourselves in order to take care of our child. We are still waiting on disability -it was denied once and may be in appeal for another year or longer. This is a real challenge for the thousands of Michigan Grandparents who are raising their Grandchildren. It needs to be addressed by Michigans lawmakers. Personally, we will survive without food assistance and welfare payments, but not without health care. We are barely over the 139% of poverty level, but cannot possibly pay the premiums that exist in the insurance exchanges, which would take 1/2 our income each month.

    1. Analyst

      Jan and Tina, since the federal exchanges will not begin open enrollment until October 1, 2013, I would urge you to fill out an application then to see what kind of health insurance cash assistance, also called “cost sharing” as well as premium tax credits, you and your spouse would qualify for based on your income.

      Though you are correct that at exactly 139% of the federal poverty level you would not qualify for Medicaid Jan even under an expansion, you would most certainly qualify for assistance with your premiums so long as you make under 400% of the federal poverty level.

      Once you fill out the federal application the calculation will be done to determine how much will be deducted from your premium. Private exchanges are not legally able to provide you with access to tax credits and cash assistance for your premiums, only the federal exchange because it will connect to your IRS data, which a private exchange won’t be authorized to do.

      Hope this helps.

  2. Tina

    I lost my job 4 years ago and lost my health insurance. While I was fortunate to find another job after 4 months, I am still uninsured. Insurance premiums are almost $800 a month. There is no way I can afford that in addition to paying childcare, housing, utilities, groceries and gas. Even with the Medicaid expansion my family will still not qualify for Medicaid. I am upset at the thought of having to pay a penalty for being unable to purchase unaffordable insurance.

  3. Scott

    This article would be more valuable to people who have lost their job healthcare coverage by pointing them to companies that offer low cost plans. People with employer-provided healthcare plans are accustomed to “cadillac” plans which pay for most of the costs of even routine, minor health issues, often with small co-pays and deductibles. But people often do not need the comprehensive plan. If a person does not have a pre-existing condition, he/she can find a plan for $100 to $250 per month, depending on the extent of coverage. A relatively healthy person could go with a “catastrophic” – type policy. An analogy to car or homeowners’ insurance: a zero deductible policy will cost double what a high deductible plan will cost. A few thousand dollars in uncovered medical expenses should not bankrupt a 60 year old person if he/she has been diligent in saving. If the person has spend everything they have earned over 40 years?…..well, don’t cry that you are in a financial bind. The person should have a policy that covers a major illness (cancer, heart bypass, etc.). But to cover all visits for a sore throat?…..yes, such a policy will be expensive.

  4. Linda Brauer

    It was important to learn from a previous post that private plans on the exchanges won’t be able to provide tax credits and cash assistance for premiums, but that federal plans will. Thanks, “Analyst!”

    I am also glad that in another post, Scott brought up “pre-existing conditions.” How many 60 year olds don’t have a pre-existing condition, though, like high blood pressure, particularly if they have been having regular checkups, so would even be aware?

    I actually thought I didn’t have any pre-existing conditions until my husband and I tried to purchase an individual health plan. I already knew that no individual plan in Michigan provides outpatient mental health coverage, but even in regard to physical health, though I had never been diagnosed with osteoporosis, I was denied coverage because I was taking a $40/month, generic medication to prevent bone loss! I asked to talk to an actuary at the insurance company. I explained that my doctor had told me that I had excellent bones at my checkup, two months earlier, and I even offered to send them my x-rays, which I had already requested. I was still denied. It was not just my “pre-existing condition” that was denied, however, –I was.

    When we contacted BCBS, through different brokerages, as the one insurance company that’s required to cover pre-existing conditions, we didn’t have the $10,000 deductible that would be required before coverage would start, in addition to having to pay the monthly premiums. For people who are unemployed, who were not expecting a Cadillac plan, this was useless. Why is it that when people are healthy enough to work full time, that that’s when they can afford health insurance!

    We were frantic, because we could barely make our house payments, but pay we did. Our house was all we had left. Scott asks why someone in their 60s wouldn’t have money set aside for a rainy day or catastrophic plan. That was because we’d spent $1006 a month on COBRA, for the 18 months allowed. My husband’s previous employer even cut us off of COBRA two months early, to our horror, and I had to enlist our Congressman’s help to get our insurance reinstated for two more months. We had to spend our last $2000 in savings on health insurance, instead of on fixing a roof leak, our car, teeth, our air conditioner, and other things. We paid it because we knew we couldn’t have a gap in coverage if we wanted to maintain portability for “pre-existing conditions” when we became insured with our next employer. We were confident that one of us would find a job with group health plan coverage before our COBRA ran out, so thought of it as an investment. We had never had a problem finding jobs before, had no criminal backgrounds, DUIs, and had ever even smoked. We couldn’t even get jobs as census takers, though we’d gotten over 95% on their timed tests. My husband always worked straight commission jobs, so we have never collected unemployment. We volunteer a lot, though. We work. We just don’t get paid for it.

    No one ever talks about not having insurance, perhaps because they know other people will assume they aren’t “taking responsibility” –until it happens to them. A couple of weeks ago, even my sister was surprised to learn that I don’t have health insurance. I would if I could. If Scott would like to sell me a catastrophic plan I can afford, though, I hope he contacts me! I’m not even taking that medicine to prevent bone loss, anymore. They have since found out it’s bad for jaw bones.

    It’s good that with the ACA there will soon be a way for people to be able to take responsibility. Health care professionals deserve to be paid. Obama Care is better than No Care or no one caring. It’s also a matter of life and death.

  5. Bill Lewis

    The recent GR Press article on health insurance does not explain why the Brauer’s did not purchase health insurance that they could have afforded from BCBSM – Michigan’s carrier of last resort that would have covered any pre-existing conditions that they might have had. Since 2010, any of those plans would have covered an annual physical for Mr. Brauer. I don’t understand why the lack of an annual physical would have aggravated his heart condition either. Perhaps they only medical plan they could have afforded would have had a very high deductible that they would have had to pay for but if something truly awful happened, wouldn’t it be better to have that coverage than none at all?

    A family that is responsible for $10,000 or $20,000 of medical expenses is better off than one that is responsible for $50,000 or $250,000 in expenses.

    mrs.

  6. Linda Brauer

    I am Linda Brauer, who was featured in the article and in an earlier post. I can understand why “Lewis” would respond as he or she did, because I wouldn’t have believed our situation, either, if it hadn’t happened to us. In this land of opportunity, we were brought up to believe that trying our best, working hard, getting a good education, following the rules, believing in God, and doing unto others, would insulate us, and for everything else we should purchase insurance! To find out that sometimes it doesn’t work out the way we’d planned, must be like hearing there is no Santa Claus. It seems surreal to me, too, sometimes! We did contact the carrier of last resort, by the way, through three different brokerages. To have to pay a $10,000 deductible after having paid monthly premiums may seem like a small price to pay for something that could mean the difference between life and death, or compared to the cost of just one hospitalization, –unless you simply don’t have it. It’s not that we don’t want to. NO one would choose to live this way!

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