Health Care Crisis

Michelle Moulton of Sammamish, Wash., speaks with conviction and from experience when she says, "Health insurance shouldn't be just for the wealthy and the healthy."

She and her husband own a small painting contracting company. They couldn't afford to buy employee insurance for their four to 10 employees, but with two children they felt they had to find individual health insurance for their family. After much research, they thought they'd chosen well--until they needed to use it.

The Moultons are typical small businesses owners. The Northwest Health Gap Study, conducted by the Northwest Federation of Community Organizations and the University of Washington School of Public Health and Community Medicine and released in October of 2006, found 67.8 percent of small businesses (50 or fewer employees) do not offer health insurance. A hefty 81 percent said it simply was too expensive to provide coverage that meets the needs of their employees.

National Dilemma

The problem isn't limited to the Northwest or small businesses. According to a Robert Wood Johnson Foundation study, 79 percent of all businesses surveyed nationwide were concerned about affording projected employee health care insurance increases. The lack of health insurance not only affects families and individuals, it affects the entire health care delivery system. The Office for Oregon Health Policy and Research reports that nationally the total cost of full-year or part-year uninsured was almost $125 billion in 2004.

Michelle Moulton and her husband thought they were being prudent in a difficult health care market. However, when their daughter broke and dislocated her elbow, they learned that surgical fees had to exceed $16,000 before the insurance claims department would begin making substantial payments. The insurance company also sold them a "physician card" to cover about 50 percent of an office visit. They've yet to find a doctor who will accept the card.

When asked if he believes health care is in crisis, State Rep. Peter Buckley, D-Ashland, was quick to respond.

"Absolutely. No question about it. We're at the point where so many small businesses are needing to cancel employee insurance and people are left without insurance. Something has to happen."

Growing Problems

Even though Oregon's economy has been slowly recovering from the economic downturn of recent years, the uninsured population rose from 14 percent to 17 percent of the state population in just two years, 2002 to 2004. High rates of unemployment, increasingly expensive health insurance premiums, and severe reductions in the Oregon Health Plan and Medicaid program have contributed heavily to the growing uninsured population. With the exception of adults over the age of 65 who qualify for Medicare, all age groups are increasingly likely to be uninsured in Oregon. In 2004, uninsured Oregonians numbered 609,000 with the number increasing yearly. Fully 61 percent of Oregon's uninsured are employed.

"We are becoming a have and have not society," Buckley said.

Trouble did not stop for the Moulton family with their daughter's broken elbow. Michelle was misdiagnosed and subsequently underwent unnecessary chemotherapy. In the end, medical bills unpaid by their insurance rose to approximately $30,000 in out-of-pocket expenses.

Ultimately, the Moultons stopped all college savings for their children, all their retirement savings and refinanced their house to pay their medical debts. Because of the chemotherapy, Michelle no longer qualifies for insurance even though she's healthy and was misdiagnosed.

According to the Washington Post, health insurance premiums for workers nationwide have gone up 7.7 percent this year, which is less than the 9.2 percent they went up in 2005. However, since 2000, health insurance premiums have gone up 84 percent compared to wages, which only went up 20 percent, and inflation, which increased by 18 percent. Annual insurance premiums for a family of four average $11,480 per year through employer health insurance programs. Workers contribute $2,973 of that, $1,354 more than six years ago. Employees working for smaller companies (less than 200 employees) will pay even more out of pocket, averaging $3,550 for a family of four.

A national telephone survey by USA TODAY, ABC News and the Kaiser Family Foundation in early Sept. 2006 learned 80 percent of the respondents were dissatisfied with the cost of health care in the United States, estimated to be $2.2 trillion or $7,129 per person just for this year.

"Every year, we wind up paying more and getting less coverage," said poll respondent Tammy Dougherty of El Paso, Texas.

A Frightening Pattern

The health care crisis doesn't bode well for the economic health of our country. Christian Weller, senior economist at the Center for American Progress notes that while employer-provided insurance dropped from 63.6 percent to 59.5 percent between 2000 and 2006, there was nothing for those people to fall back on. Personal savings is now the second lowest since the Great Depression, at -0.7 percent. Household debt is running at 126.4 percent of disposable income. Most people couldn't sustain a major medical event.

It's the people who are working directly in the health care industry who often express the most concern.

Dr. Norm Castillo, Family Practice O.D., from Corvallis speaks from personal experience: "Along with access, the major issue of cost shifting has to be addressed. Stated simply, cost shifting results from more people not having health coverage, which raises the cost of coverage for those who do. As this happens, costs for health coverage rise and more people become uninsured and the cycle takes off. I believe we are at the point of inflection on the curve of cost acceleration with financial consequences to the economy beyond our predictions"¦ We need a revolution, and we need it now."

Businesses large and small are facing difficult choices. Rudd Johnson, senior vice president of Human Resources for Harry & David, says that their company, like others nationwide, is facing rising health care costs and like others, they are carefully looking at their options.

"We want to retain a comprehensive high quality health plan [for employees] but, like everyone else, we are being forced by rising costs to look at eligibility requirements, plan design, deductibles, cost-sharing, coverage, co-pay, in the packages we can offer our employees. Like all companies large and small, health care cost is one of the fastest growing costs that we face. It's not sustainable for the companies to absorb increases by themselves."

The Kaiser Foundation reports the drop in employer-based health insurance coverage and notes that it "has prompted concerns that the job-based health insurance system, which covers nearly 175 million Americans, could unravel in the face of runaway costs."

Castillo is not one to put the blame on just one sector of the health care industry. "Many of my comments are based on local observations," Castillo said, "but apply broadly. I believe we have system problems, and what I say in no way reflects on any individuals or groups in our area. In fact, we should all remember that we "waltzed" into this situation together — doctors, patients, hospitals, insurance companies, government, and pharmaceutical houses (some people do dance faster than others)."

Health insurance carriers say changing demographics in America are pushing rates as much as other factors.

There's not enough young people in the pool," said Cary Badger, Vice President of Customer Marketing for the Regents Blue Cross Group in Seattle " The cost of technology increases and outpaces cost of living by a large degree. We're now treating more people and more intensely. And people are doing more extensive testing, for example MRI and CAT scans, which are disproportionately expensive."

Badger also noted the decreasing economic cushion most families have, saying that most bank accounts are in the hundreds not the thousands of dollars. It's a moot point until you're sick. "When you're vertical you're a good consumer — horizontal not so good,"

Insurance influence

As the largest health care provider in the United States, Regence Blue Cross Blue Shield casts a significant shadow over the health care industry. Though technically a non-profit, Regence Blue Cross Blue Shield is part of a national network of companies. It files its income taxes under a consolidated Federal income tax return which establishes the allocations of taxes among the Regence Companies. Therefore, it technically is associated to this large multi-armed national conglomeration of companies in the Regent Group, the majority which are for-profit companies.

A consortium this big is not without influence. The Center for Responsive Politics, which is devoted to tracking political contributions, shows that during the 2003-2004 campaign swings, The Regence Group, parent company of Blue Cross Blue Shield, donated over $12 million to candidates and political causes. Nationally, for the 2004 election cycle, insurance contributions totaled $36,323,768. As reported to the Federal Elections Commission, insurance was the ninth largest contributor to national campaigns. The total health-related PAC's donations in the 2004 election cycle reached a total of $31,723,576 on the federal level. Soft money contributions from the health industries contributed just to Oregon political campaigns in 2004 topped $8.5 million. Special interests for health and welfare contributed $35,447 to Oregon's 2004 election campaign.

"They are very influential," said Buckley, about the health care lobbiests. Buckley said campaigns are funded through the party leadership. Funds donated to the House leadership are parceled out to individual campaigns. Through those funneled funds, the leadership gains influence and controls the process of legislation. As an example, Buckley cited the Health Parity Bill, which passed in 2005 with only one dissenting vote. However, that bill was first introduced in 1989. Influential lobbyists were able to get the leadership to tie it up and not present it for a full vote until 16 years later.

Early in October 2006, Buckley attended a health conference called by the insurance industry.

"They're looking to keep their jobs," Buckley said. "They see that there's a problem. They wanted to discuss if the state was moving toward a single payer system." As Buckley sees it, it's more likely that Oregon will look at system that is "more hybrid than single payer" for health care coverage.

Health care is a central part of the platform for state Sen. Alan Bates, D-Ashland. As a state senator and also a family care physician, he has long been working on the state's health care problems. Bates chairs the Commission on Health Care Access and Affordability. The Commission is working on a plan for major health care legislation, a plan that's fully funded by pooling both commercial and government health funds. It would create a public/private health care partnership, allowing choice of private insurance coverage and health care providers with clearly defined expectations.

"The insurers and their plans would function the way they have been, but they would no longer look to individuals to pay for the premiums, they would look to this pool for their premiums," Bates said.

Administration would use the Oregon Family Health Insurance Assistance Program format, which Bates points out has already proven successful for this type of approach and uses a similar public/private partnership. Buckley said that the Archimedes Movement, backed by former Gov. John Kitzhaber, includes much of what Bates'committee is researching.

Whatever plan or plans are chosen, health care reform will be written in broad strokes to allow the state to approach the federal government for waivers in use of federal funds the state now receives. However, Buckley, Bates and others hope the ultimate result of the legislative response may prove to be a good first response to the health care crisis Oregonians now face.

If future legislation such as this provides part of the solution, for-profit health care remains another part, according to Colorado State Rep. Morgan Carroll, a situation he calls, "unrepentant greed."

Quoted in the Rocky Mountain News in July, 2006, Carroll said, "Health care is now a for-profit game. In 2005, the insurance industry had $401.8 billion in profits. I have no problem with profits, but their profits need to be put in context of the financial damage they are causing individuals and businesses"

Carolann Hennen and Tammy Achurra both contributed to this report.