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The Nation | WASHINGTON OUTLOOK

A New Worry About an Old Concern: Health Care

January 07, 2002|RONALD BROWNSTEIN

Suddenly, all of the vital signs for America's health care system are pointing toward the danger zone. The conditions are coalescing for a surge in the ranks of the uninsured, similar to the crisis of the early 1990s that helped drive President Bush's father from office--and then nearly destroyed Bill Clinton's presidency when he tried to respond.

"We are likely to see a jump in the number of people who are uninsured this year that is greater than anything in the past decade, at least," says Ron Pollack, executive director of Families USA, a health care advocacy group.

In the coming months, the rising number of Americans without health insurance is likely to become a growing public concern, even as the return of federal budget deficits crimps Washington's capacity to reverse the trend. That gap between need and response, between will and wallet, may help sharpen to a point the approaching debate over whether the country can still afford all of the 10-year, $1.35-trillion tax cut Bush pushed through Congress last spring.

Health care became a huge issue in the early 1990s because of a vicious circle of rising costs and reduced access. As health insurance premiums soared (up 12% in 1988 alone), employers responded by dropping coverage or forcing employees to bear more of the cost, which compelled many low-income workers to decline coverage. Rising unemployment in the recession of the early 1990s compounded the problem. The result was an explosive rise in the number of uninsured, from 31 million in 1987 to nearly 40 million when Clinton took office in 1993.

That rapid erosion in coverage inspired Clinton's 1993 effort to restructure the health care system. His goal was both to control costs and guarantee universal access. But his plan was too vast and complex, and it collapsed--a victim of both its own weight and the determined resistance of virtually every interest group in the health care world, from insurers to small employers.

Yet even amid the wreckage, the storm that raged through the health care system in the early 1990s seemed to blow over by the middle of the decade. Insurers got a better handle on costs, largely by pushing more workers into managed care programs that limited access to expensive services. That allowed the insurers to hold down employer premium increases to as little as 1% by 1996, according to a Kaiser Family Foundation survey.

That price restraint gave employers the means to expand coverage. And the tight job market of the late 1990s gave them the motivation to lure new workers with health insurance. In Kaiser surveys, the share of employers offering health insurance jumped from 55% in 1998 to 67% in 2000. At the same time, with their treasuries bulging, the states and the federal government in 1997 agreed on an innovative partnership to fund insurance for the children of the working poor, the Children's Health Insurance Program (known as CHIP).

Taken together, these developments reversed the seemingly inexorable rise in the uninsured. The number of Americans without health insurance peaked in 1998 at 44 million and by 2000 had fallen to 39 million. (The 2000 figure isn't exactly comparable to the earlier numbers because of a change in Census Bureau procedures, but all experts agree the trend was toward greater coverage in the late 1990s.)

But these gains now look like merely the calm between storms. Indeed, one expert Jonathan Cohn recently quoted in a trenchant New Republic article on the health care dilemma says the country faces virtually "perfect storm" conditions for another rise in the uninsured.

The spiral of rising cost and reduced access is spinning again. Skyrocketing drug costs, tougher negotiating by hospitals and doctors, and a consumer and political backlash that has forced insurers to loosen the reins on managed care are all driving up the price of insurance. Kaiser found that employer premiums jumped 11% last year, and experts such as Emory University's Kenneth E. Thorpe say the country can expect "a long-term acceleration" in insurance costs that will renew pressure on employers to drop or scale back coverage.

Meanwhile, rising unemployment means more workers are losing their insurance along with their jobs. The slackening labor market also is reducing pressure on employers to court workers by offering coverage at all. (Ominously, the share of employers offering insurance dipped slightly in 2001.) And the budget squeeze is pressuring states to retrench their programs for the uninsured. California Gov. Gray Davis recently shelved for two years a planned expansion of CHIP to working adults; Tennessee is looking to trim 180,000 people from its Medicaid rolls.

These factors may have swelled the number of Americans without health insurance by at least 1 million in 2001 and possibly more, experts say. The figures for this year could be just as bad.

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