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Gap in Health Coverage Hits 'Near-Elderly'

Insurance: Fewer people are covered from retirement until they can earn Medicare. Many forgo needed treatments.


WASHINGTON — At age 56, Carla Everett is about to lose her medical insurance, a terrifying prospect for someone with a blood disease that requires twice-monthly transfusions that cost more than $2,000 each.

For decades, she was covered by her husband's employer-provided policy. But Wilson Everett, an electrical engineer, developed severe muscular dystrophy seven years ago and now, at age 59, is enrolled in Medicare. But the federal insurance program for the elderly and disabled doesn't cover spouses younger than 65.

Because of her disease--which was diagnosed last year--Carla Everett is now considered disabled. She also will become eligible for Medicare, but only after a requisite two-year waiting period. Until then, she will have no insurance once her policy expires at the end of June. To prepare for the two-year gap, the Richardson, Texas, woman is eyeing her life savings--and trying to stretch her transfusion sessions to once every three weeks.

"I guess we'll just eventually go broke. It's a life-or-death situation," Wilson Everett said. "We've called probably over 100 insurance companies, but no one will touch her."

Carla Everett is far from alone.

More and more Americans, for a variety of reasons, are losing health insurance in the decade before they qualify for Medicare at age 65.

"There are many more uninsured than just a few years ago," said analyst John Rother of the American Assn. of Retired Persons.

In fact, people between the ages of 55 and 64 are losing coverage faster than any other age group. It is an ominous but little-recognized phenomenon at a time when Congress and President Clinton are poised to spend $16 billion during the next five years to expand coverage to the nation's 10 million uninsured children.

Many of the estimated 2.83 million uninsured Americans in the 55-to-64 age group are early retirees whose former employers increasingly are reneging on a promise to cover them until age 65--an unanticipated consequence of the massive corporate downsizing in recent years. Others, like Carla Everett, are under-65 spouses of Medicare beneficiaries. Some simply hold jobs that don't come with health insurance.

Whatever the reason, the plight of the "near-elderly" poses significant challenges to long-term efforts to overhaul Medicare and to keep it from going bankrupt as unprecedented waves of baby boomers begin to enter the program early in the 21st century.

For one thing, one of the most obvious fixes--raising Medicare's eligibility age--would further swell the ranks of the uninsured, possibly by hundreds of thousands.

Like the Everetts, most older uninsured Americans have enough assets to make them ineligible for Medicaid, the state-federal health program for the indigent. But few can afford to buy individual policies without feeling the pinch, because such coverage is extraordinarily expensive.

Because older people are more prone to disease, insurers charge them steep premiums--hundreds of dollars a month in some regions. In extreme cases, premiums can range as high as $1,000 a month.

"If you're 62 and uninsured, good luck on buying insurance," said one Labor Department analyst. "Who's going to sell you a policy, especially if you've got a serious medical condition?"

Not surprisingly, many "near-elderly" who become uninsured simply stay that way until they reach 65.

But as these Americans join the growing ranks of the uninsured, experts believe, they begin to behave much like the other 40 million or so people who lack insurance: They tend to neglect preventive care and may, like Carla Everett, postpone or forgo needed treatment.

As a result, by the time they finally enroll in Medicare--and belatedly receive care--their conditions may have deteriorated so much that their bills will be higher than they otherwise might have been.

Those increased expenses inflict yet another financial burden on a program whose hospital trust fund, as it is, is projected to go bankrupt shortly after the turn of the century.

"This is one of the biggest public policy questions of the early 2000s," said John Erb, an analyst with Foster Higgins, an employee benefits consulting firm.


"People just haven't focused in yet on the fact that this is happening," said Marilyn Moon, an Urban Institute analyst and a Medicare hospital fund trustee.

No single study fully quantifies the problem of uninsured older Americans and its consequences. But research efforts are beginning to shed light on various aspects of the trend. Together, they form what analysts say is an emerging problem that cannot be ignored when policymakers contemplate long-term reforms for Medicare.

A February study by the Urban Institute, for instance, found that the proportion of employers providing health benefits to their early retirees is dropping dramatically. In 1985, 75% of full-time workers in large and mid-sized firms had the option to continue their medical insurance into retirement; by 1993, only 52% could do so.

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