Laurie Rubiner

The Real State of the State

Communications — Wed, 19 Jan 2005 14:00:00 -0500

A New America Event
01/19/2005 - 12:00pm

California is struggling to cope with a wide array of serious policy challenges: Job creation, education, health care costs, a budgetary crisis, political leadership, immigration and regional inequities. An opportunity exists to tackle these issues head on, but partisanship and parochialism threaten to stifle real progress.

The New America Foundation's California Program delivered its analysis of the "State of the State" in Los Angeles on Jan. 19, 2005. Panelists provided a wide range of innovative proposals to address the most… more

Under the Umbrella of Health Care

Cecille Isidro — Sat, 01 Jan 2005 00:00:00 -0500

On Election Day, California voters narrowly rejected a ballot initiative -- Proposition 72 -- that would have required businesses with 50 or more employees to provide health insurance to their workers or contribute financially to a state health insurance pool.

That defeat was not terribly surprising, given that preelection polls revealed a steady erosion of support for the measure as some sectors of the business community invested millions of dollars in a drive against it. After years of searching for a solution to the state's uninsured problem, California legislators and the governor must now go back to the drawing board to search for another idea that will cover the 6 million uninsured Californians and save the state and hospitals money, all without breaking the backs of employers.

The vote on Proposition 72 gave us some intriguing insight into what kind of system Californians want, and the state's legislators should be mindful of the signal that voters sent. Despite a well-financed campaign opposing it, Proposition 72 failed by the slimmest of margins -- 49 to 51 percent. It's an indication that California voters are serious about solving the problem of the uninsured, but also recognize that placing the burden solely on business may not be the best way to achieve their goal.

The close vote on Proposition 72 suggests that many insured Californians are feeling some insecurity about the stability and affordability of their own health coverage, and with good reason. The cost of health insurance has soared in recent years, and employers have imposed cost containment measures, such as increasing worker contributions and ending dependent coverage or making it more expensive. This growing insecurity, coupled with the fact that 6 million people in California lack health insurance, entirely makes it easy to understand why voters are tempted to support a mandate on employers to provide health insurance. Yet the outcome also suggests that Californians fear losing their jobs even more. After all, the main argument many employer groups used against Proposition 72 was that it would be too costly for businesses, forcing them to downsize, move out of the state or fold entirely.

But the business community is not monolithic in its opposition to requiring employers to provide health benefits. In fact, many employers who voluntarily provide generous employee and dependent coverage welcome an employer mandate. They recognize that they are subsidizing companies, such as WalMart and McDonald's, by providing health insurance to the spouses of workers who may be employed without coverage at one of these companies. Listen to John Catsimatidis, CEO of Gristedes supermarkets, who argued in a recent Christian Science Monitor article that if his "competitors are allowed to be irresponsible employers, not providing health and other benefits -- they're not only hurting their employees, they're hurting mine."

While an employer mandate such as the one proposed through Proposition 72 would have made strides toward leveling the playing field among medium-sized and larger employers, it would have covered only about a fifth of California's uninsured population. Because the mandate would only apply to employees in firms with more than 50 employees, only 18 to 26 percent of uninsured Californians would have gained coverage. This is because it targeted the wrong segment of the population: according to the California HealthCare Foundation, 95 percent of the targeted employers with 50 or more employees already offer insurance to some of their workers -- whereas only 65 percent of smaller employers (who would have been exempt from the mandate) offer coverage. The initiative would have left the millions of employees in small businesses without coverage, perpetuating the outdated notion that health insurance is best delivered through employees in large firms. And it would have continued the trend of some businesses subsidizing the health insurance of dependents whose employers don't offer coverage.

Proposition 72, however, did recognize that health insurance is and should be a shared responsibility, a fact that didn't receive much attention. The legislation would have required employers to contribute 80 percent of the cost of health care premiums. Individuals would have been required to accept coverage from their employers and contribute the remaining 20 percent. While this distribution may be skewed, the concept is correct and should be expanded. Yes, employers should be required to contribute to the cost of their employees' health insurance. But individuals have a role as well. Health insurance should be not only a right, but a duty. All Americans should be required to maintain a basic level of health insurance and to contribute a reasonable share of their income toward the cost of their own coverage. Where necessary, government should provide financial help to bridge the gap.

This solution -- universal coverage for universal responsibility -- is achievable. To be sure, many Californians are uninsured because they are too poor to afford health insurance. But nearly a third are living in households where their income is three times the federal poverty level -- nearly $50,000 for a family of three. Many of these individuals could afford to contribute toward the cost of their health insurance if they chose.

In addition, almost half of the uninsured in California are relatively young and healthy -- between the ages of 18 and 34 -- and they are the fastest growing demographic of the uninsured. Many of these younger people are playing Russian roulette with their health -- gambling that they'll stay healthy. But when they do get sick or suffer a traumatic injury, their ensuing health costs often force them into personal bankruptcy or are passed onto taxpayers or the insured in the form of higher premiums. Bringing all these younger and relatively healthy individuals into the insurance pool would spread risk more evenly among the population, bringing down the cost of insurance for everyone. It would also protect the rest of California taxpayers from having to absorb their uncompensated health care costs.

Another important advantage to a mandatory health insurance system is that health insurance would be tied to the individual rather than the employer. The current voluntary employer-based system evolved during the Depression when wage caps forced employers to find another way to compensate their employees. They began to offer their employees and dependents health and pension benefits as a substitute for higher wages. This system made sense 45 years ago when most employees worked full time supporting an at-home wife and children.

Today's work force, however, looks very different; millions of people are so-called "nonstandard" employees: part time, temporary and low-wage. These individuals either aren't eligible for employer-sponsored insurance or earn too little to afford their share of the premiums. Indeed, two-thirds of the 45 million Americans who are uninsured are working. Under a universal, mandatory system, all individuals would have insurance regardless of the number of hours they worked or their place on the corporate ladder. And people would no longer have to worry that losing a job means losing their health insurance, a phenomenon that causes labor market distortions such as job lock. It would also do away with one of the most vexing problems for people with employer-sponsored coverage -- the inability to take their doctors and health plans with them from job to job.

And unlike Proposition 72, a system of mandatory health insurance would be universal because it would apply to everyone, regardless of the size of the employer or the number of hours worked. This would level the playing field among businesses, since all employers would be required to contribute toward the cost of coverage. It would also end the cost-shifting of dependent coverage that occurs under today's voluntary system.

Since employers would have the option to contribute a fixed amount toward the cost of their employees' coverage, it would stabilize their costs, insulating them from unpredictable yearly premium increases. Small businesses that can't afford to offer their employees health insurance today would also receive tax credits to help them cover the cost.

The good news for Californians is that they don't have to start from scratch -- the building blocks are already there. Almost half of California voters support an employer mandate and Governor Arnold Schwarzenegger recently suggested an individual mandate as a route to coverage. Marrying an employer mandate that includes all employees to an individual mandate would result in all Californians gaining coverage and could serve as a model for other states and the nation.

Health Insurance for Working Parents: A Fairy Tale

Cecille Isidro — Thu, 16 Dec 2004 00:00:00 -0500

Once upon a time in America, there was a young dad who toiled each day assembling automobiles at a local factory. It was hard work, but it provided him with ample treasures: enough money to put food on the table, pay his mortgage, and make sure that his wife and three children had excellent medical coverage

Today, that man's daughter also works long hours as an office manager for a local auto-repair business. But the insurance provided by her employer does not cover her two young children or husband, a self-employed carpenter. What's more, the couple's combined annual income of $40,000 is too high for her children to qualify for publicly-funded health care programs like Medicaid or the State Children's Health Insurance Program (SCHIP). The couple's only option is to buy extremely expensive private insurance. Given their mounting expenses, the couple has decided to forgo health insurance altogether, keeping their fingers crossed that the family stays healthy.

The simple fact is that many employers today don't offer employees and their families health insurance coverage, and even if they do, it is often too expensive for many to afford. A recent study by the employee benefits company Hewitt Associates found that a growing number of employers are trying to limit their dependent care costs by increasing the amount employees need to pay to cover a spouse and children or by getting rid of dependent coverage altogether. What's more, according to the 2003 Current Population Survey, the percentage of children receiving dependent coverage fell from 66% in 2000 to 61% in 2003. This means that 2 million fewer children are receiving health coverage through their parents' employers, a drop that is increasingly due to small businesses opting not to offer coverage.

In the richest nation in the world, how is it that 45 million Americans -- two thirds or whom are working -- are uninsured?

To understand how we got here, start with your history book. Our voluntary, employer-based health care system was born during World War II when, faced with wage caps, employers began offering health insurance benefits to employees and their dependents as a way to increase compensation and attract and retain quality workers. This system made sense in the 1930's and 40's when most workers had full-time jobs that they stayed with for many years, supporting themselves and their families, usually a stay-at-home wife and children.

But today's workforce looks very different. Millions of people are "nonstandard" workers -- part-time, low-wage, or temporary employees. These jobs are much less likely to offer benefits like health insurance coverage. Why? Because they often require unskilled labor and have high turnover. Even those part-time jobs requiring greater skill increasingly go to moms who are giving up health benefits for flexible work schedules and more time to care for their children. Employers aren't as concerned with instilling loyalty in this segment of their workforce and, even if they were, it is much too expensive to offer all these employees coverage.

In fact, cost is one of the single biggest reasons that employer-sponsored coverage has eroded. Expensive medical technology, prescription drugs and malpractice premiums have contributed to a double-digit rise in health insurance costs during each of the past five years. Unlike other items in their budgets, such as wages, employers have no control over increases in their health insurance premiums, making their costs unpredictable.

Faced with incalculable, skyrocketing increases, it's no surprise that employers are cutting back, pushing more of the cost of health insurance onto their employees or deciding not to offer health benefits at all.

What can we do to fix our health care system so that all Americans have access to affordable, quality health care? One solution is to make health insurance citizen-based instead of job-based. Health insurance should be a benefit offered to all Americans, not just those whose employers decide to provide it. In a citizen-based system, health insurance would follow the individual rather than the job, so people would no longer have to worry that losing a job means losing insurance. Parents who want to take time off to care for a child or cut back on their hours to spend more time with their families could do so without putting their families' health care at risk.

Another solution is to make health insurance, like car insurance, mandatory. How would this help? If all of us were required to have insurance, the nearly 19 million 18-35 year-olds, who either can't afford to buy insurance or are gambling that they'll stay healthy, would be brought into the pool. Bringing this relatively young and healthy population into the insurance market would spread risk more evenly, lowering costs for everyone.

A critical part of the solution is to strengthen our public health insurance programs -- Medicaid and SCHIP -- to cover all uninsured children. Many of today's more than 8 million uninsured children are already eligible for these programs, but their parents often face difficult barriers getting them enrolled and keeping them covered. Finally, there are those children who are caught in the middle -- their family's income is too low to afford private insurance and too high to allow them access to public insurance.

The prospect of a government takeover of the health insurance industry has stymied any attempt to reform our broken system. But much of the rhetoric we hear is simply fear-mongering. There are practical solutions that don't involve big government. And these solutions are not only feasible, they are necessary. Health care costs don't appear to be decreasing any time soon, and the number of working Americans without insurance continues to climb. It's a problem that is unlikely to go away unless those most effected by the problem, including the growing numbers of uninsured working parents, demand change.

America's Fragmented Health Care System

Health Policy — Sat, 31 Jul 2004 00:00:00 -0400

The American health system is rapidly approaching crisis. For those fortunate enough to have health insurance, health care costs are escalating — health insurance premiums rose almost 14 percent in 2003, the biggest increase in over a decade. For the 43 million people who went without health insurance last year, the system has already collapsed. As more and more people feel the strain of spiraling costs and face the fear of losing coverage entirely, the public increasingly cites these dual predicaments — rising health care costs and the growing number of people without health coverage — as the biggest health care problems America faces. In fact, recent polls show that Americans are as concerned about health care costs as they are about the war in Iraq and terrorism. The consequences of the instability and high cost of health insurance coverage for our nation’s health are tremendous.

For the complete document, please see the attached PDF version.

Insurance Required

Cecille Isidro — Tue, 20 Jan 2004 00:00:00 -0500

Believe it or not, there is a politically appealing way to achieve universal health-care coverage: simply require all U.S. residents to buy insurance, with government help if necessary.

To understand why and how this might work, consider that the majority of those who lack health insurance are not unemployed. Nearly 60 percent of uninsured Americans work full time; another 16 percent work part time. These tend to be workers whose employers don't offer them health insurance (because they are low-wage or newly hired), or who can't afford to pay a share of the premiums.

In addition, about a third of the uninsured live in families with household incomes greater than $50,000 a year; many of these people could afford the costs of health insurance if they chose. Moreover, many of the uninsured are relatively young and healthy: about 40 percent are aged eighteen to thirty-four, and another 20 percent are under eighteen. This provides an opportunity. Requiring all these young, healthy Americans -- who are currently gambling that they'll stay healthy -- to enter the risk pool would drive down premiums for those Americans who currently have health insurance while lowering the cost of entry for those who don't.

Here's how it might work. States would establish insurance pools that would offer every American a choice among competing private insurance plans. Insurers offering coverage through these pools would be required to offer a core benefits package and could not discriminate on the basis of pre-existing conditions. Individuals could purchase more-comprehensive coverage if they wished.

Each year, according to a recent study published in the Annals of Family Medicine, 20 percent of people with insurance are forced to change health plans, resulting in higher costs and lower-quality care. A citizen-based (as opposed to employer-based) universal insurance program would eliminate this problem by enabling workers to keep their doctors and health plans when they changed jobs. And rather than being limited to the health plans chosen by their employers, workers could choose plans and levels of coverage from among competing private providers.

Under a universal citizen-based plan those employers who wished to continue administering health-care benefits could do so; but those who wanted to shed the administrative burden could choose instead to contribute a fixed amount (currently employers contribute more than $300 billion to employee health coverage each year) to an insurance pool or to the plans of their employees' choosing.

This proposal would cost the federal government somewhere on the order of $80 billion a year, with most of that money going to provide subsidies to those who couldn't afford the minimum cost of coverage themselves. But the plan would also save the nation the cost of uncompensated care (currently some $35 billion, which is passed on to employers and insured employees in the form of rising premiums), and it would recoup some of the $65 billion to $130 billion of labor productivity that is lost to untreated health problems each year.

Won't Americans balk at a radical proposal that forces even those who don't want health insurance to buy it? Actually, it's hardly radical: Americans are already well accustomed to the idea of mandatory insurance. After all, almost anyone who wants to drive a car is required to buy car insurance, and anyone who wants to carry a mortgage must buy homeowner's insurance. The details are different, but the idea is the same. Applying this principle -- universal coverage in exchange for universal responsibility -- makes economic, moral, and practical sense.

Universal Coverage, Universal Responsibility

Health Policy — Fri, 09 Jan 2004 00:00:00 -0500

Please see the attached PDF version of this working paper, or the related executive summary.

Health Insurance Required

Cecille Isidro — Tue, 05 Aug 2003 00:00:00 -0400

Last week Sen. John Edwards became the first presidential candidate in U.S. history to propose solving the problem of the uninsured by making health insurance mandatory. Although his proposed health care mandate is limited to children and young people -- all those under the age of 21 -- it offers the most promising way forward for eventually covering all 41 million uninsured Americans, and it marks a major turning point in our nation's health care debate.

The United States spends more on health care per capita than any other nation, yet one in seven of our citizens, and 12 million children, still lack basic health insurance. There are essentially only two ways to overcome this and achieve universal health insurance. One is to adopt a single-payer, government-run system, which is the norm in Canada and most of Europe. Such a system would have the government acting as the purchaser, administrator and health care decision-maker for all Americans. But a government-run approach has been flatly rejected by the American people time and again, despite the best efforts of five presidents, from Truman to Clinton.

The other -- and far more promising -- path to universal coverage is to approach health insurance as we approach car insurance: Make it mandatory. In essence, all Americans should be required to purchase their own health insurance from among competing private providers, with the government providing subsidies to those who need them.

The first and most obvious benefit of an individual mandate is that it would achieve universal coverage. By contrast, neither President Bush's proposal for refundable health care tax credits nor the various plans put forth by other Democratic candidates could meet this test, because all approach the problem in a piecemeal fashion.

The promise of "universal coverage for universal responsibility" goes beyond solving the problem of 41 million uninsured Americans. Structured correctly, such a policy would also bring down health care costs for most Americans (by virtue of forcing a large number of relatively young and healthy Americans into health care pools), and offer citizens more health care choices. It would also provide all Americans who now have insurance something they don't now have but badly want: the ability to take their health plan and doctors with them from job to job.

One of the overwhelming benefits of mandatory coverage is that health insurance would gradually become citizen-based instead of employer-based, enabling all citizens to select and keep the health insurance provider of their choice and to take advantage of group rates, regardless of their employment status. This would help American workers at all levels: from the highly compensated executive changing jobs to the single mother working two part-time jobs to the independent contractor who can't afford the prohibitive costs of getting insured in today's individual market.

For political reasons, it is understandable why Edwards would start by requiring health insurance for all children. After all, parents are spending the month of August making sure their children have the immunizations and physicals required to enter school in September. But if we force parents to meet these basic medical requirements, shouldn't we also make it easier for them to secure the health insurance necessary to comply with the law? And in a country that prizes the virtue of personal responsibility, is it really too much to expect parents to insure their children, especially if the government provides a helping hand for those who need it?

The logic of personal responsibility and of requiring all parents to cover their children raises the obvious question: Why not apply the individual mandate to all Americans? The Edwards campaign estimates that its plan would cover 21 million Americans who lack health insurance at a cost of approximately $53 billion a year. By comparison, both the Blue Shield of California Foundation and the Commonwealth Fund recently released independent analyses showing that by applying an individual mandate to all Americans, we could reach universal coverage for $70 to $75 billion a year. Is the value of covering the remaining 20 million Americans not worth the incremental cost of about $20 billion?

Although John Edwards is the first to propose mandatory insurance as part of his presidential platform, he is not the first presidential candidate to have endorsed the concept. Bob Dole, the 1996 Republican nominee for president, once co-sponsored legislation with the late Sen. John Chafee to require all Americans to secure health insurance by the year 2005. At the time, Dole and Chafee were joined by 18 of their Republican colleagues, half of whom remain in the Senate today. This suggests that John Edwards has not only put his finger on the most promising way to solve the problem of the uninsured but also on the approach most likely to garner bipartisan support.

Medicare, Health Care, Prescription Drugs

Communications — Thu, 24 Jul 2003 18:00:00 -0400

A New America Event
07/24/2003 - 12:07pm

New America's Jacob Hacker and Laurie Rubiner discuss the political battle over public and private social benefits.