1 Poor Design The ubiquitous risk of becoming uninsured We are the only major country on Earth that doesn't guarantee health care to all people as a right," exhorts the progressive politician pushing for universal health insurance coverage. That's Vermont senator Bernie Sanders, speaking in 2015. The eminent economist likewise laments, "The United States has the unenviable distinction of being the only great industrial nation without compulsory health insurance." That's Irving Fisher, speaking in 1916, a century before Sanders. Fisher was advocating for a bill that would make health insurance coverage mandatory, although with an economist's characteristic modesty, he did concede that his health insurance proposal "is not a panacea. It will not bring the new millennium." The new millennium came-without Fisher's help or the passage of his bill-and the distinctive American dilemma remained: how to provide health insurance to the millions of Americans who lack coverage. But if the thirty million uninsured Americans were the only-or even the major-problem confronting US health insurance policy, there would be an easy fix. Just extend one of the many existing health insurance programs to cover the uninsured. That wouldn't cut it. The problems are much bigger, and much deeper, marbled like fat throughout. Consider this: In any given month, about 12 percent of Americans younger than sixty-five are uninsured. But twice that number-one in four-will be uninsured for at least some time over a two-year period. The very purpose of health insurance is to provide a measure of stability in an uninsured world. Yet, perversely, existing health insurance coverage is itself highly uncertain. Right when you fall ill and need insurance most, you can find yourself suddenly, unexpectedly, uninsured. This risk of losing coverage doesn't get the attention it should. It gets far fewer headlines, campaign proposals, or even academic analyses than the plight of those who are uninsured at any given moment. In fact, we were ourselves at first surprised by the statistics on insurance uncertainty. So much so that we dug a little further into the data to confirm that the precarious nature of health insurance coverage persisted in the post-Obamacare era. It does. Salient or not, the uncertain nature of health insurance coverage is key to understanding the deep-rooted rot at the core of our health insurance house. This is not how insurance is supposed to work. But it's how it does "work" for all nonelderly Americans. Kids and adults. The healthy and-unfortunately all too often-the sick. The publicly insured and the privately insured alike. Your tax dollars at work Let's start with the precarious insurance of the privately insured. Almost half of the US population-over 150 million people-receive private health insurance through their employers or a family member's employer. That's almost all Americans who have private health insurance. There's no natural reason why their boss doubles as their insurer. This unusual arrangement arose through an accident of history, a common theme of US health-care policy. During World War II, the federal government imposed wage and price controls to try to prevent inflation. Employers-desperate to attract and retain scarce workers-soon discovered a way to get around the wage ceilings and provide higher compensation. They could offer-and pay for-their workers' health insurance, because these payments weren't counted as "wages." The practice of excluding employer payments for their employees' health insurance from the definition of employee earnings has remained in place to this day. As a result, any such payments are tax-free. An employee doesn't have to pay income tax on any contributions her employer makes to her workplace-based health insurance premium. As any international travel aficionado knows, there's real savings to be had from being able to buy things tax-free. The "duty-free" nature of employer-provided health insurance is a large part of the reason that employers are the source of most private health insurance in the US. It's also responsible for a whopping $300 billion a year in forgone tax revenue that the government doesn't collect on wages in the form of employer contributions to health insurance premiums. To put that number in perspective, that's about two fifths of the amount of public spending on K-12 schooling in the United States. The unintended reliance on the employer as health insurer has a number of unfortunate consequences. For one thing, it's Robin Hood in reverse, providing more of a handout to richer Americans-whose tax rates are higher and who therefore get a much bigger subsidy when something is excluded from their taxable income. For another, workers can end up "locked" into their jobs-and not retiring or changing jobs-simply because of the health insurance their employers provide. And here's the real kicker: if a worker becomes too sick to work they can . . . wait for it . . . wait for it . . . that's right . . . lose their health insurance. Precisely when they really need it to cover their medical bills. Kind of a dumb way to set things up, if you think about it. In the mid-1980s, this absurd state of affairs prompted federal legislation to try to address the problem. It created a legislative patch, known as COBRA coverage, specifically designed to help people maintain their health insurance even after they leave their jobs. It does so by allowing employees to continue their current health insurance coverage for up to eighteen months after having left their employers. Well intentioned no doubt, but ultimately COBRA may be only slightly more useful than snake oil. We've already alluded to some of the problems with COBRA in the introduction, when we described how the COVID-19 pandemic inspired the government to temporarily strengthen that law. It was moved to do so because, in another recurring theme of US health policy, the patch had a catch. The real problem is that while COBRA gives the former employee the option to continue to enroll in her former coverage, she must pay the full cost of that coverage. When she was employed, her employer paid for most or all of her health insurance premiums. Now that she's lost her job-and with it her paycheck-she has to pay the full premium herself, which averaged around $12,000 a year in 2019. "Sticker shock" is what one senior benefits consultant termed the typical reaction to the high premiums from COBRA coverage, "at a time when you're financially stressed already." One New Jersey woman who had worked as a clerk at the same firm for nearly twenty years found herself laid off after she was diagnosed with stage-three ovarian cancer. She died a year later at the age of fifty-two, having stopped her treatments. "It wasn't financially sustainable to keep paying Cobra out of pocket," said her daughter, reflecting on her mother's decision. It should therefore not be too surprising to learn that, in practice, COBRA coverage for the unemployed is quite rare. Only 130,000 Americans had COBRA coverage in 2017, although more than eleven million adults were unemployed that year. "[COBRA] is well named because of its bite," one journalist quipped. Isn't it ironic While the privately insured risk losing their coverage when they lose their jobs, many people with public health insurance face the opposite problem: they can lose their coverage if they get a job and their income increases. Eligibility for public coverage can also require that people wait until they are sufficiently ill to get coverage; they can then lose that coverage if their health improves. Once again, this creates uncertainties-and glaring gaps-in health insurance coverage. Some of these gaps are vividly illustrated by an in-depth ethnographic account of a year in the life of four generations of a poor, African-American family in Chicago. Chillingly titled Mama Might Be Better Off Dead, the book describes some of the extraordinary challenges faced even by those fortunate enough to be eligible for public health insurance coverage. Although the events take place in the late 1980s, most of the glaring problems it describes persist to this day, despite the series of "landmark" health insurance reforms that subsequently occurred. At the center of the family is Cora Jackson, also known as "Mama" to her family. We'll get to some of the problems with her health insurance coverage in the next chapter. For now, the experiences of her adult son Tommy and of her adult grandson-in-law Robert provide a window into some of the peculiar circumstances in which one can gain-or lose-public health insurance coverage in the United States. Both Tommy and Robert suffer from major health problems that-in a common Catch-22-are eligible for public coverage only once they become sufficiently severe, and only as long as they remain so. Tommy had worked on and off for years at various jobs-bartender, butcher, exterminator-none of which provided health insurance. His high blood pressure therefore went uninsured-and untreated-until, at age forty-eight, he had a disabling stroke that paralyzed the left side of his body and confined him to a wheelchair. Now officially disabled, he at last became eligible for the public health insurance program that now covers 8.5 million permanently disabled Americans a year. Covers them, that is, after a required two-year waiting period that begins at the onset of their disability. Robert had known since he was a young man that his kidneys did not function properly. He was periodically incapacitated by bouts of fatigue and swelling in his legs. Yet none of his short-term, minimum-wage jobs provided health insurance. Only once his kidneys were sufficiently impaired did he qualify for public insurance through a program that covers over a quarter of a million patients who have end-stage (but only the end stage) renal disease. By the time Robert was forty, that insurance had already paid for a kidney transplant, which his body had rejected. It was now paying for ongoing dialysis treatment. Every few days, Robert would travel to a dialysis center to be hooked up to a machine that filters his blood for bodily toxins, as well-functioning kidneys would otherwise have done. In a macabre sense, Robert's failed transplant was a blessing in disguise. Had his transplant been successful and he had recovered kidney function, his insurance coverage would have ended-because he'd no longer have "end-stage" renal disease. This would have left him with a functioning kidney but without insurance to cover the immunosuppressant drugs that he would need to be on for the rest of his life, and that cost thousands of dollars a month. This "now you have it, now you don't" nature of health insurance coverage is unfortunately closer to the rule than the exception. Tommy's and Robert's precarious coverage came courtesy of specific Medicare programs that are perhaps less well known than the Medicare coverage for the elderly. But uncertainty also pervades the health insurance coverage people get under Medicaid, the public health insurance program for low-income Americans that covered one in five Americans in 2019. Medicaid coverage is often hit or miss because its eligibility requirements are based on factors that frequently change, such as a person's income, where they live, and their health conditions. Other eligibility pathways are temporary by design, such as pregnancy or recent childbirth. As a result, one in four women who are covered by Medicaid while they are pregnant lose that coverage shortly after giving birth. "The clock is ticking," as one physician described his scrambles to get his patients the medical care they need-including medical care unrelated to childbirth-before their coverage runs out. Some women repeatedly cycle in and out of coverage as they have children. What do they do when they aren't pregnant? "I refuse to get sick," answered one woman who lost coverage six weeks after the birth of her fifth child. And what about coverage for her kids? Kids can be eligible for Medicaid even when their parents are not, as eligibility typically extends higher up the income distribution for kids than for adults. Income limits on eligibility also tend to be higher for younger kids than for older kids. That means that kids can get kicked off insurance by making the mistake of getting older; a first and sixth birthday are particularly ill advised. And kids have a way of growing up. At age eighteen, many low-income teenagers lose their coverage, unless they were in foster care, in which case they can stay covered until age twenty-six. Ours is not to reason why. A pediatric cardiologist, Arthur Garson, told the heartbreaking story of a patient named Ginny who was born with congenital heart disease, whom he had treated since she was five. She died shortly after her nineteenth birthday-when she lost coverage, and with it the prescription drug insurance that paid for her essential medication. As Dr. Garson wrote: I think of Ginny often-almost every day. I never could understand how the "system" that had paid to fix her heart, and paid for her medicine, dropped her at nineteen. But that's the way it works. Medicaid (and the State Children's Health Insurance Program) covers children of the poor, like Ginny, but between the ages of nineteen and the Medicare age of sixty-five, the so-called safety net has huge holes-and Ginny fell through. All told, this Medicaid coverage comes with an annual cost to taxpayers of more than $600 billion. If you-like us-find your mind starting to glaze over as numbers creep into the hundreds of billions, here's one way to wrap your head around the Medicaid price tag: it's about the same as the national defense budget. Once you add Medicare-the public health insurance program for people who are sixty-five and older and people with disabilities, which covers another one in five Americans-we're looking at almost $1.5 trillion in annual government spending. No wonder a Treasury official has suggested that the right way to think about the federal government is "as a gigantic insurance company with a sideline business in national defense." Let's hope that our national defense provides better protection than our health insurance. At least the benefits from national defense are automatic. We all enjoy the security and protection it provides, without having to think about it, or sign up for it. The same unfortunately cannot be said of the substantial taxpayer spending on public health insurance. That's because, in order to be covered, individuals have to first realize which of the alphabet soup of state and federal programs they are eligible for. Then they have to figure out the particular documentation they need to submit for the program they think they may be eligible for, fill out the application, and submit that documentation. And hope that they are in fact eligible for the program they are applying for, and that their application is complete and correct. Excerpted from We've Got You Covered: Rebooting American Health Care by Liran Einav, Amy Finkelstein All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.
