American Crisis: The Working Uninsured

Dec. 15, 2005 — -- An estimated 46 million Americans don't have health insurance -- but most of them do have jobs -- everything from doggie day-care provider to freelance writer and editor.

The uninsured often don't get necessary medical care and, as a result, are in poorer health and more likely to die prematurely than those with insurance. There are six million more uninsured Americans today than in 2000, and that is creating another crisis -- a crisis in emergency medicine.

In his last documentary, Peter Jennings focused on this national problem.

ER on Life Support

Nearly one-third of Houston residents -- 1.1 million people -- have no insurance. And that's not even counting the recent evacuees from Hurricane Katrina. When people without insurance need to see a doctor -- for anything from a cold to a serious illness -- they often go to the emergency room. By federal law, emergency rooms cannot turn anyone away if they have space.

Dr. Guy Clifton, of Houston's Memorial Hermann Hospital, says on a busy night, patients can wait five or six hours to see a doctor. When its emergency room is filled to capacity, the hospital must often turn away patients and ambulances. He said "from time to time" people died because the hospital simply didn't have the medical capacity.

It costs more to treat someone in an emergency room than just about anywhere else. The ER is also where more bills go unpaid. In 2003, U.S. hospitals delivered $25 billion worth of health care to patients who didn't pay.

"The problem is, when you have 25, 30 percent uninsured in your community, the hospitals that perform these functions lose so much money that they can't afford to expand capacity," Clifton said.

That's one reason why emergency rooms in Houston -- and around the country -- are shutting down. And may be why some of the newer hospitals have actually been built without ERs.

Small Businesses Feel the Pinch

One of the problems with health insurance today is how hard it can be to get. In 2004, about 174 million people got insurance through work. Nearly 79 million were covered by the government -- including the elderly, the poor, and those in the military. Everyone else who wanted insurance had to buy an individual policy. Only about 27 million people got insurance that way, and it can be extremely expensive.

Even people who can afford individual insurance can't always get it. In 45 states, insurance companies are allowed to deny people coverage. So those with certain medical conditions can find it impossible to buy health insurance.

Penny Baldwin sells health insurance to individuals. It's something, however, she can't buy herself. She's a cancer survivor, and many insurers are increasingly reluctant to write policies for people with even minor health problems.

"I'm seeing more and more problems with the younger people, also," she said. "So, they're not doing people that have acne … because of the medication. They're scared to death of even seasonal allergies. Asthma is just like, 'forget it, we don't want it.'"

Employer-based insurance is essentially the only option for many people with preexisting conditions. But today even employer-based insurance is in trouble. The percentage of employees covered by insurance at work keeps dropping. Small businesses especially are seeing the impact of soaring health care costs.

"In 1994, our average monthly premium was about $2,000. Our average 2004 monthly premium, just 10 years later, was $4,700," said Scott Elmore, the owner of Stan's Automotive outside Denver. "If things continue the way that they're going, then, I'm going to have to reduce or eliminate coverage for my employees."

Health-insurance costs for small businesses have risen so steeply that more and more of them have been forced to drop coverage. That's why only 59 percent of small businesses offer health insurance, compared to 98 percent of large businesses.

The consequence of one person getting sick in a small group can be devastating. Ideally, an insurance plan needs a large number of people all paying premiums into one pool. Each year, only a few of them will get very sick. The pool is a way to spread the costs of the very sick among everyone else.

But as health care costs rise, this system is breaking down. It is becoming harder to get and keep health insurance for people who are sick -- the very people who need it most.

What's Good for GM

Health-insurance costs threaten not only small businesses, but also some of America's largest companies.

General Motors is the largest private sector provider of health insurance in the nation -- 1.1 million people, including employees, dependents and retirees get health coverage from GM. It still provides the kind of health insurance most people would love to have. The company pays 100 percent of the premiums for unionized employees. They have low co-pays and can choose their own doctors.

This system evolved by accident during World War II when government wage and price controls were in effect. Today corporations are expected to offer this benefit, but it has become hugely expensive.

"Based on the current data, it would be about $1,525 per vehicle that we produce. That's the total health care cost per vehicle, and interestingly, it's a lot more than we pay for steel per vehicle for example," said GM's CEO Rick Wagoner.

That's not an exaggeration. This year, General Motors will spend about $2.7 billion on steel and $5.6 billion on health care. Health-insurance costs are one reason so many jobs move overseas, and why many companies are slashing benefits -- and shifting costs to employees. It's one of the reasons why General Motors announced that it would lay off 30,000 workers and close nine North American factories.

Follow the Money

It's impossible to understand why the price of health insurance keeps going up, without understanding what's happening to health care costs. In 2003, the country spent $1.7 trillion on health care. That's up 500 percent since 1980. Inevitably, insurance costs keep rising too.

Insurance companies are often the bad guys in many people's minds. But surprisingly, according to the federal government's data, on average, about 87 cents of every dollar pays for medical care. Only about 13 cents goes to insurance-industry administration, marketing, salaries and profits. And that hasn't changed in more than 30 years.

Health care costs and insurance premiums are skyrocketing because today Americans use more medical care than ever before: more tests -- PET scans, CT scans, MRIs -- more doctor's visits, more procedures and more drugs. Americans use 70 percent more prescription medicine than they did in the early 1990s.

John Mackee, the president of Whole Foods Market, the growing natural-food supermarket chain based in Austin, Texas, believes part of the reason everyone's insurance costs are rising is because individual consumers don't have an incentive to control costs.

For example, a prescription drug like Nexium, for acid reflux, costs a patient with insurance about $20 for a month's supply. The real cost is about $120. Someone spending their own money might consider a drug like Prilosec, which works just as well for most people and costs just $20 sold over the counter.

So today Whole Foods employees have a new health-insurance plan called Consumer Driven Health Care that the company hopes will make employees better health care consumers.

Employees have a high deductible, but the company contributes to a "health reimbursement account" that the employee can use to pay for the deductible. Whatever the employee doesn't spend stays in the account from year to year.

"It becomes their money," Mackee said. "If they don't spend it, it doesn't get taken away from them at the end of the year. So, psychologically they begin to have ownership of that money. They begin to ask questions."

Since employees pay high deductibles, the plan is less expensive for the company and as a result, more employees here are now covered by health insurance. But there are concerns. One of them being that employees may avoid necessary treatments.

But others say high-deductible plans don't address a fundamental, longer-term issue. It's the high-intensity, high-technology procedures like hip replacements and heart transplants that cost so much money and drive up medical and insurance costs.

"The problem that the country faces, which is that health insurance is going up and up and up because of technology-driven care is going to continue," said Dr. Jay Crossen, who is with the California health-care plan Kaiser Permanente. "And as a consequence of not grappling with some of these issues, what we have done is to freeze out a certain portion of the population and to create growing unfairness in this society. And that is not sustainable long term."

Less Is More?

To rein in insurance costs, a difficult question is starting to be asked: Does all this expensive medical care -- the latest technologies and the newest medicines -- provide a real benefit for the money?

An Electron Beam Tomography machine can test for heart problems, at a cost of $500. Is it worth it?

Bert Barrette thinks everyone at any risk of heart disease should have this scan. He isn't a doctor, though. He's one of the owners of a clinic that bought one of the $2.2 million machines.

If everyone who feared they might have a heart attack had this test, it would cost tens of billions of dollars. Some insurance companies pay for this test, others don't. But there is little evidence that using this expensive, cutting-edge technology results in fewer heart attacks.

Dr. Elliot Fisher and his fellow researchers at Dartmouth Medical School studied the relationship between how much is spent on health care and how beneficial that health care is. The results were surprising.

The researchers found that patients with the exact same problems in places like Florida got much more medical care than patients in places like Minnesota -- even after adjusting for age and illness. And they found out that in those states that spent more money on medical care, patients were actually worse off.

Fisher believes the evidence is clear that spending more money on medical care can be harmful -- and raise the cost of health insurance for everyone.

"Any time a new technology is made available, the question is, again, does this work? Is it safe? And is it valuable?" Crossen said.

Take heavily hyped arthritis drugs like Celebrex and Vioxx, which cost much more than over-the-counter pain medicines. Because of questions about the safety of these drugs, Kaiser insurance plan doctors prescribed Vioxx much less frequently than many other doctors in the country.

As a result, thousands of patients were never exposed to the dangers of the drug. Last year, it was pulled from the market for causing heart problems. There was another benefit -- using cheaper alternatives saved the health plan $32 million.

But Americans don't like boundaries when it comes to health insurance. So few people in health care -- or the government -- want to make the hard decisions about what insurance should or shouldn't cover. By default, the country has a patchwork system of health insurance that often pays for medical care with little regard for cost, benefit and effectiveness. The result is that for more and more Americans, health insurance is no longer affordable or accessible.

"I turn around and look at the abundance of the American health care system, compared to other health care systems. I have no doubt that we can cover the entire population of the United States with high-quality, comprehensive health care," said Dartmouth's Fisher. "The question is whether we have the will and the energy to try to figure out how to do it."