Friday, August 25, 2006

Health Insurance and the Cost of Housing

In today's Wall Street Journal, Vanessa Fuhrmans writes about a growing phenomenon: workers at large firms choosing not to enroll in company-sponsored health insurance plans. She notes:

But in recent years these big companies have also increased the premiums, deductibles and co-pays that employees must contribute under these programs, leading many workers to forgo their employers' insurance. Between 1996 and 2004, the number of private-sector employees who enrolled in the health-benefits plans offered to them declined from 87.7% to 81% at big employers, according to new government data.

She notes that one reason for the decline could be more married workers choosing family coverage at the cheaper company, rather than each worker individually insuring at his or her own company. She continues:

But the biggest reason appears to be that even company-subsidized health care is proving unaffordable or providing too little upfront value to many workers. The sharpest drop in participation rates was among large retailers, where the share of eligible workers opting for company benefits fell to 67.3% from 83.8% over the eight years. But health-plan participation in other industries also has declined, even at companies with unions, many of which have fiercely fought employers' efforts to shift more health-care costs onto workers.

And the human interest angle:
Sarah Landis, a nursing assistant at Children's Hospitals and Clinics of Minnesota, says high premiums are why she opted out of her health plan. While a spokeswoman for Children's, which employs around 4,000, says the not-for-profit hospital system has actually lowered employees' share of premiums to 30% of the total, from 50% three years ago, Mrs. Landis says the monthly payment of $543 is about one-third of her income. (A high-deductible family plan is available for $295 a month, and a middle-of-the road-plan is $359.)

"It's a choice between our house payment and health insurance," says 25-year-old Mrs. Landis, who has two young daughters. Apart from her husband's asthma, which requires the couple to pay $70 in prescription drugs each month, all four are healthy, she says. So when her husband left his job to become self-employed three years ago, the family went uninsured. He may take a law-enforcement job so the family can get coverage again soon. In the meantime, Mrs. Landis says, "we just hope we don't get sick."

There is some research to support Mrs. Landis as more than an anecdote. Three years ago, Helen Levy and Thomas DeLeire raised the questions, "What Do People Buy When They Don't Buy Health Insurance and What Does that Say about Why They Are Uninsured?" With emphasis added, they found:
Using data from the 1994 through 1998 Consumer Expenditure Surveys, we compare household spending on 16 different goods (food at home, food away from home, housing, transportation, alcohol and tobacco, interest, furniture and appliances, home maintenance, clothing, utilities, medical care, health insurance, entertainment, personal care, education, and other) for insured versus uninsured households, controlling for total expenditures and demographic characteristics. The analysis shows that the uninsured in the lowest quartile of the distribution of total expenditures spend more on housing, food at home, alcohol and tobacco, and education than do the insured. In contrast, households in the top quartile of the distribution of total expenditures spend more on transportation and furniture and appliances than do comparable insured households. These results are consistent with the idea that poor uninsured households face higher housing prices than do poor insured households. Further research is necessary to determine whether high housing prices can help explain why some households do not have insurance.

4 comments:

Roland Patrick said...

"It's a choice between our house payment and health insurance,"

Which is a no-brainer. You can always borrow against the equity in your home to pay unexpected medical bills.

$543 per month is about $6,500 per year, and very few people need a quarter million dollars of medical care in forty years.

Anonymous said...

The thing is it's always the poorest that suffers the most.

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