Job Losses and Health Care: How to Make a Bad Situation Worse

In October 2007, unemployment in the U.S. was a robust 5.5%.  According to the latest figures out today, it has jumped to 8.5%.  That may not seem like a lot, but it’s the highest level since 1983.  Not reflected is that numbers, however, is the increase in the uninsured.  By Kaiser Family Foundations’ rule of thumb, 3.3 million Americans have lost their insurance when they lost their job in the past year and a half.  And it’s a good question whether they’ll get their benefits back.

The Economic Recovery Act addressed this domino effect where lost jobs become lost insurance by partially subsidizing COBRA – the program under which you can continue to receive benefits from your former employee if you pay 100+% of the premium.  The stimulus funded subsidies up to 65% to enable more people to participate (because if you think about it, how many people have $300-$500 to spare each month when they’re unemployed?), but giving more people access to COBRA is just the tip of the iceberg.

Jane Sarasohn-Khan on Health Populi talks about the “stickiness” of employer-based benefits:  “once benefits are offered, they are difficult to take away.”  This makes a lot of sense – the easiest way to alienate and anger your employees is to take away a benefit they used to have, or ask them to pay substantially more out of pocket for it.  Once you have the Point-of-Service plan with minimal co-pays, it’s hard to walk that back to an HMO with $50 co-pays.  But given the volatility of the job market and how many companies are now concerned about staying afloat, all bets are off.  We know that two out of three employers are planning to cut back on the health coverage they offer – some by an annoying but not infuriating 8%, but some by dropping coverage altogether.  Indeed, given that employers have been consistently reducing or dropping benefits over the last ten years, the economy gives them cover to “unstick” the benefits expectations of their employees – after all, they'll say, aren’t you glad to still have a job at all?

This recession will eventually end (and if it doesn’t, we’ve got bigger problems – “Fall of Rome”-type problems), but what will happen to the unemployed when they find new jobs?  With the expectations bar lowered, will they still settle for jobs with less than stellar benefits?  In the meantime, what will happen to their medical needs, particularly if their employer does not offer COBRA?  This question is sadly much easier to answer – fewer people will get the primary care they need when they need it;  more people will have nowhere else to go for care except community clinics and their local Emergency Room; and health care disparities will only increase.  After all, the unemployment rate for African-Americans is above 13% and Latinos range from 8-14%.  These same communities are already more likely to be uninsured or on Medicaid and, as a completely related factor, are at much higher risk for treatable chronic diseases like asthma, diabetes, hypertension, etc.

Given how dependent our health care is on our job, the economic recession has the real ability to do lasting-damage to both the coverage we can get from our employer and on the health of those who have lost their jobs or are between jobs.  If you need more motivation to work for health care reform this year, think of it this way – the crash of our job market means for too many of our citizens, we’re out of time.

(Photo credit:  solidstate on Flickr.)