Bosses, workers, states face health-care crisis
By Noam N. Levey • TRIBUNE WASHINGTON BUREAU • June 28, 2010
WASHINGTON — Despite passage of the landmark health-care overhaul this spring, the nation's existing health system is continuing to fray, raising the prospect that the country could experience a crisis before the law establishes a new safety net in 2014.
Three months after President Barack Obama signed the law, state governments struggling with budgets savaged by the recession are contemplating further cuts in health-care aid for the poor, despite the promise of more federal dollars.
At the same time, several million laid-off Americans and their families who have used federal assistance to hold on to health insurance will lose coverage in coming months as the special assistance program expires. Those with jobs face their own challenges as employers continue to look for ways to pare health benefits and shift more costs to employees, if not drop health coverage altogether.
And people in all walks of life face rising health-care prices and skyrocketing insurance premiums, which in many parts of the country are rising at double-digit rates this year.
"If the economy does not improve substantially, we may be taking some steps backward before we take steps forward," said Ron Pollack, a supporter of the health-care overhaul who heads the consumer group Families USA.
Worse before better
Obama's senior health-care adviser acknowledged that the road ahead may be rough. "Will plans continue to raise prices? Will some people continue to lose coverage? I think the answer is yes," said Nancy-Ann DeParle, head of the White House Office of Health Reform. "It is something we are concerned about."
DeParle called the next several years a "bridge period" until 2014, when Americans will get guaranteed access to health coverage along with billions of dollars of federal subsidies to help them pay their insurance bills.
The Obama administration thinks a series of initiatives in the new health-care law will help hold the line during this period.
Since the law's passage, administration officials have begun offering new tax breaks to small businesses to encourage them to offer their employees health benefits. The administration is developing regulations designed to increase oversight of insurance companies and prevent major rate increases.
The Department of Health and Human Services is working with states to set up high-risk pools for people who have been denied coverage.
"I think we have tools that will help make things better than they would have been" if the health-care legislation had not passed, DeParle said.
Costs outstrip aid
Early research suggests that some of the short-term aid in the health-care law, such as $5 billion for new high-risk pools, may be inadequate.
"This is not about health-care reform," said Helen Darling, president of the National Business Group on Health, an organization of large employers that provide coverage to 50 million workers, retirees and dependents. "It's just existing pressures on the system. It's business as usual."
In a March survey, a sampling of 507 large employers reported that their health-care costs would jump an average of 6.5 percent this year, slightly less than last year, but still more than three times as fast as prices are rising in the overall economy.
Many large employers are shifting more of those costs onto employees. Small businesses, which are less likely to offer their employees health benefits, are under even more pressure as they wrestle with insurance premiums that are shooting up by more than 20 percent in some parts of the country.
More businesses appear to be either cutting benefits or shedding employees to offset rising health-care costs, according to early responses to an economic survey by the National Small Business Association due next month.
COBRA subsidy wanes
So far, federal and state officials have managed to hold together a health-care safety net with the help of billions of dollars of stimulus spending authorized by Congress last year. Washington provided an estimated $2 billion in 2009 to help more than 2 million people and their dependents hold onto their health benefits after being laid off.
Now, under pressure to control spending, Congress appears certain to end the COBRA assistance, which provided unemployed workers with a 65 percent subsidy to help them pay their premiums. Normally, people who lose their jobs but want to keep their insurance through COBRA must pay the full cost of the premiums, making it unaffordable for most.
Democrats on Capitol Hill are moving to provide states with money to prop up their Medicaid programs, which have seen a huge surge in enrollment since the recession began. For many, the extra aid is not expected to be enough.