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Towards the Edge: Recession Presses Need for Change

Posted on Apr 28, 2009 by Sergio Ulloa ()  | Tags: emergency room, financial downturn, government health insurance, Health Insurance, healthcare reform, hospitals, medicaid, Medical Insurance, medicare, private health insurance, recession

America has been in need of healthcare reform for some time now with government health services slated to become an ever larger part of the budget in the future, while the increasing cost of private health insurance has outstripped growth in income by about 3 to 1 over the previous years. While the government debates reform, the recession is having an increasing impact on people and may be a driving force in the widest ranging healthcare reforms in the United States in years. One fact about the American healthcare system that is fast becoming apparent is that it doesn't function very smoothly. America has the highest medical costs in the world and the price tag does not always guarantee the highest quality care. Private insurance is prohibitively expensive unless purchased through an employer-based plan, while government run insurance manages to be under funded with an enormous budget at the same time. One thing is for certain, the current mix of public and private insurance have not excelled over time. A recent survey carried out by David Cutler of Harvard University and Alexander Gelber of the Wharton School show that over the last two decades, a larger number of Americans are losing health insurance coverage at some point during the year. Using data from the US Census Bureau, the authors compared statistics from 1983-1986 and 2001-2004, finding that the percentage of the population that lost their insurance coverage during a 12 month period increased from 19.8% to 21.8% during the two decades or so in between the data sets. The percentage of people losing insurance as you look at the poor and those not in perfect health increases alarmingly. There is good news though, in that for most of those losing their private insurance, many of them seek coverage under various government healthcare programs. The most recent Census Bureau figures for 2006-2007 show a minor dip in private insurance from 67.9% to 67.5% of the population, but the number of uninsured people in the country went down from 47 million to 45.7 million people. Government health insurance seems to have absorbed most of these people, growing from 80.3 million people covered to 83 million in the 2006-2007 period. While it's nice to see that government programs are stepping in to fill the gap, the problem is that its old news. It does not even begin to take into account the massive shifts brought on by the recent recession. The consequences are beginning to take a heavy toll on the health of the country in a myriad of ways. Since the start of the downturn in December 2007, employers have cut 5.1 million jobs. The number of people currently on continuing unemployment benefits is at 6.13 million, bringing the national unemployment rate to 8.5%. Because many people in the US receive their medical insurance through their employers, lost jobs means lost insurance. The Kaiser Family Foundation says that a 1% increase in the unemployment rate means an increase of 1 million enrollments in Medicaid and the Child Health Insurance Program (CHIP), and also a 1.1 million increase in uninsured people. This high rate of lost jobs, estimated to be as high as 14,000 jobs per day, is pushing people out of their employer-based insurance and either into a government health insurance program or, if they are too young for Medicare or simply not poor enough to qualify for Medicaid, are forced to purchase private individual health insurance plans if they would like to have health insurance at all. An investigation by Consumer Reports has found this trend to carry problems of its own. The investigation showed that personal health insurance is regularly more expensive than the equivalent cover would be through an employer-based plan. It is often extremely expensive or completely out of reach for people of meager income and less than stellar health. Consumer protection in this area is also an issue where, once again, America demonstrates the importance of appropriate regulation by not having it. Consumer Reports found that most state insurance regulators are not charged with evaluating the coverage these products offer and most disclosure requirements are decidedly limp-wristed at best. So, trying to compare plans, figure out prior to purchase what is and is not covered, or approximately calculating the out-of-pocket liability for any serious medical procedure is nigh impossible. While affordable, these low-end personal plans often come with extensive exclusions and loopholes which often leave people in serious medical debt if they suffer a medical catastrophe. As everyday American consumers are continuing to feel financial pressure, recent polls have shown an increasing trend to put off medical care. A poll released by Thomson Reuters this month showed that over the past year, 20% of American households have either delayed or cancelled receiving medical care. Out of those who did cancel or delay care, 24.1 attributed it to the cost. The last time this poll was administered in 2006, the number of people delaying or canceling care was at 15.9% and the main reason for delays and cancellations was lack of time. Another chilling figure from the poll was that 21% of American adults were anticipating they would have difficulties paying for either health insurance or healthcare services within the next three months. As the financial implications on healthcare snowball for the consumers, so too does it snowball for medical practitioners. One instance of this is in North Carolina, which has the fourth highest unemployment rate in the country at 10.7%. The increasing numbers of unemployed and uninsured people have led to a remarkable increase in traffic in free or discounted clinics and also emergency rooms, where hospitals are obliged to administer treatment to everyone, insurance or no. This often means hospitals are performing millions of dollars worth of healthcare services and not seeing any money from it. On top of this, people who do have insurance and actually pay the hospitals for their services are shying away from optional procedures and surgeries which would usually help generate income to keep the hospital running. At the moment, hospitals under financial pressure from both the shrinkage of revenue generating procedures and the amount of "uncompensated care" hospitals are offering to those in need, in some cases only staying functional through infusions of federal monies from the stimulus package. The picture of American healthcare is looking increasingly bleak. Record numbers of Americans are losing their livelihoods and insurance, forcing the federal government to widen enrollment to more people and ratchet up spending on government programs which receive regular sniping from conservatives for being too expensive already. Not only that, but the health and finances of the people may suffer in the long run as they either cannot get the healthcare they need, or go into medical debt receiving it. One thing is for certain, the current hodge-podge of public and private in the healthcare system is a mess that is only getting worse with the limping economy. It can no longer be fixed by piecemeal measures and requires an alteration at the fundamental level of which the system operates.
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