Lately in the news, words like “epidemic” and “pandemic” are used to describe the possible eventuality of a “bird flu” sweeping through the global community. The fear is that a new unseen threat could spell the demise of thousands or even tens of thousands of unsuspecting victims. The real epidemic or pandemic (you choose the word) is healthcare itself. With more than 50 million Americans without even the most basic form of health insurance and many tens of millions of people more struggling to meet the complicated and expensive maze of premiums and deductibles and co-pays, the American healthcare system is the equivalent of a very ill patient on life support.
Today, fewer than 60% of Americans receive healthcare insurance through an employer-sponsored health insurance plan. In the future, the concept of employer-sponsored heath insurance may be rare (certainly rarer than today). Of the uninsured in the United States, nearly 80% are self-employed or hourly wage earners – waiters, waitresses, beauticians, salespersons, florists, cashiers, and owners of small businesses.
Costs for healthcare and health insurance are soaring. In West Virginia, even those fortunate enough to have health insurance, the typical medical procedure or hospitalization is followed by a maze of bills from providers, hospitals, and any one else with even a remote relationship to the patient.
As an example of just how whacky the system is in West Virginia, my daughter was transported by ambulance and hospitalized with an asthmatic condition for three days. Her treatment was fine and she has fully recovered but I am still in recovery from the costs. The onslaught of invoices from the hospital, doctors, radiologists, and others were literally impossible to verify. Even calls to the hospital were met with confusion. In some instances, we received invoices from parties completely unknown to us. Until there is some transparency to medical costs and patient billing, the healthcare system will never be improved and costs will never be contained. Like a magician pulling a rabbit out of his hat, the mailman delivered new invoices for months after my daughter’s treatment.
Under the typical employer sponsored health insurance, the employer picks up the majority of the cost of the health insurance premium (e.g., 80%) and the employee is responsible for the remaining portion of the premium amount (e.g., 20%). The employee is also typically responsible for deductibles and co-pays as applicable. Thirty years ago, 20% of a medical procedure may have been reasonable. Today, twenty percent can be debilitating and painful for anyone to pay. Unfortunately, the alternative is even worse.
Under the current system and with current laws and regulations, the future for employee health insurance is frightening. As of September 30, 2005, Walmart was the largest West Virginia employer with approximately 11,440 employees. As the largest West Virginia employer and as an employer with substantial profits, one would assume that its employees were well compensated with substantial benefits. Not all is as it seems. And, keep in mind, to be competitive, Walmart influences the management practices of the employers of many, many millions of Americans.
In West Virginia, by a three to one margin, Walmart is the employer most cited by those seeking benefits under the West Virginia Childrens Health Insurance Program (“CHIPS”). In other words, Walmart employees children are the most treated under the CHIPS program. Effectively, we (the public) are subsidizing Walmart’s ‘falling prices”. Walmart is only one example of a system plagued by problems but it is an intriguing case study.
A November 2004 New York Times article cites a study in Georgia that found 10,000 children of Wal-Mart employees were in the state's healthcare program at a cost to taxpayers of $10 million a year. The same article describes a hospital in North Carolina that found that 31 percent of its 1,900 patients were Wal-Mart employees on Medicaid, and an additional 16 percent were Wal-Mart employees with no insurance at all. And in California, a study released in August 2004 by researchers at the University of California at Berkeley determined that the healthcare expenses of uninsured Wal-Mart employees were costing the already economically-strapped state $32 million a year in taxpayer funds. Wal-Mart has disputed findings that the company encourages its employees to apply for public assistance and called the California study "biased," noting that the researchers at Berkeley did not contact the company for facts and statistics.
According to a PBS report on FRONTLINE, Wal-Mart officials claim that 90 percent of its employees are insured either through the company's policies or elsewhere. Wal-Mart spokeswoman Sarah Clark told FRONTLINE that over 500,000 of the company's 1.2 million U.S. employees are insured by Wal-Mart and that the company insures a total of 900,000 employees and their dependents. According to Clark, 29 percent of Wal-Mart associates are ineligible for coverage. Stringent eligibility requirements and the employee turnover rate may account for that 29 percent: Full-time employees must work for six months before they can be covered, and part-time employees must work for at least two years. Wal-Mart's labor turnover rate is 44 percent per year close to the retail industry average.
Wal-Mart's healthcare premiums are also high for the average associate's salary. Currently, Wal-Mart's employees must pay 33 percent of their healthcare costs: $30.50 a month for an individual or between $132.50 and $230.50 a month for families. Wal-Mart argues that its associates are a different demographic base than most companies' employees. So, even those fortunate enough to have health insurance are not fortunate to have much else.
The problem faced by Walmart is really not a Walmart problem. It is an American problem. The healthcare system and affordability of healthcare and insurance should be a top priority of the Bush Administration and Congressional leaders. It shouldn’t take a brain surgeon (or a lawyer) to understand or afford a common medical procedure. Blessed we are with the world’s premier healthcare professionals and technology. Unfortunately, too few Americans can utilize such professionals or technology.
Reform is really a life and death matter. Reform (substantial reform) is needed NOW.