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by Jacob S. Hacker
Excerpted from The Great Risk Shift
Arnold Dorsett was an American success story. An air conditioner repairman, he earned more than his father ever did—almost $70,000 a year, thanks to a relentless schedule of eighty- to ninety-hour workweeks. He owned a good home in the suburbs. His young wife, Sharon—training to be a nurse when they met, and hoping to return to school soon—stayed home to care for their three kids. Arnold was driven, a striver. He was also, it turned out, the father of a young boy who was sick and getting sicker.
Zachary had not been healthy since his birth—one reason why Sharon had never gotten that nursing degree and Arnold was working so hard to pay the bills. But it was not until Zachary was eight that he was diagnosed with an immune system disorder that promised even bigger medical costs down the road. By then, the bills had already crushed the family’s finances. Despite having health insurance and refinancing their home, the Dorsetts had run up nearly $30,000 in outstanding credit-card balances and could no longer make their car or mortgage payments. In March 2005 they succumbed to the inevitable and filed for bankruptcy, becoming one of the 425,000 to 700,000 Americans a year whose bankruptcies are medically related. It was not an easy choice. Losing their house they could accept. Losing their pride was a different matter. “I make good money, and I work hard for it,” Arnold Dorsett told the New York Times. “When I filed for bankruptcy, I felt I failed.”
Crises like Arnold Dorsett’s rarely make the headlines as they did in this case. The health woes of everyday families have simply become too numbingly familiar. Every thirty seconds, someone files a bankruptcy claim that’s due in part to medical costs and crises. Most who file have insurance, almost all are working. But insurance and employment aren’t always enough.
Consider the grim statistics. Among insured Americans, 51 million spend more than 10 percent of their income on medical care. One out of six working-age adults are carrying medical debt, and 70 percent had insurance when they incurred it. Of those with private insurance and medical debt, fully half have incomes greater than $40,000, and of this group a third are college graduates or have had postgraduate education.
Meanwhile, millions upon millions of otherwise fortunate Americans find themselves uninsured at some point, and often at several points, during their lives. Everyone has heard the numbers: 46 million Americans without health insurance, the vast majority of them in working families.
But the uninsured are a constantly shifting group that includes many more people than that. In the two years beginning in 2003, a stunning 82 million people—one out of three nonelderly Americans—went without health insurance at some point. Most were uninsured for at least half a year; more than half were uninsured for at least nine months. And yet these ordinary Americans at extraordinary risk have for years remained largely unnoticed, an inconvenient blot on the heralded success story of the American economy.
In the last few years, however, the financial maelstrom that engulfed the Dorsetts has started to move from the back pages to the front pages. Anxious conversations in corporate boardrooms and around kitchen tables have gradually grown into a national debate about America’s crumbling infrastructure of health financing.
The players in the discussion range from the giant old-economy manufacturer GM, which estimates it spends around $1,400 per finished vehicle on health costs, to the sprawling new-economy behemoth Wal-Mart, which has come under increasing fire for its stingy health benefits even as its medical costs grow. The players include state governments alarmed about the rising cost of the Medicaid program for the poor, and national officials sharply at odds about the future of Medicare for the aged. And they include families like the Dorsetts, who never thought they’d be in the dark shadows of America’s shiny high-tech system. “My friends don’t understand it,” Sharon admits, describing her bankruptcy. “They think, How could it get so bad so quick? Unless you have a sick kid, you don’t know what it’s like.”
Sadly, more and more Americans know what it’s like—from the parents of sick children to elderly Americans trying to afford prescription drugs to workers struggling to pay their health premiums (or finding their employers don’t offer health benefits at all). In the last half decade, the unraveling of American health insurance has accelerated at a frightening pace. Since 2000 the proportion of employers offering health coverage to their workers has fallen by nearly ten percentage points, and the proportion of employers that finance the full cost of coverage—once the norm—has plummeted, from 29 percent to 17 percent for individual health insurance and from 11 percent to 6 percent for family health premiums.
Meanwhile, premiums have shot up—increasing at five times the rate of inflation since 2000, while most workers’ wages have barely increased at all. In just the last four years, the share of moderate-income Americans who lack health coverage has risen from just over one quarter to more than 40 percent. A system that was barely treading water is now sinking fast.
This is not the first time American political leaders have debated the future of the United States’ distinctive system of health care financing. Again and again in the twentieth century—most recently in the 1990s—efforts to make health insurance an integral piece of the American social fabric were stymied. But today, medical costs and insurance are at the heart of insecurity in the United States, and a growing number of corporate and political leaders, and everyday Americans, know something must be done.
Unfortunately, a new barrier now stands in the way of broad risk protection in American health care—the Personal Responsibility Crusade and its chilling call for individualized Health Savings Accounts that could topple the already-fragile structure of American health insurance.
Material excerpted from The Great Risk Shift: The Assault on American Jobs, Families, Health Care and Retirement, And How You Can Fight Back by Jacob S. Hacker. Copyright © 2006 by Jacob S. Hacker, and reprinted here by permission of Oxford University Press, Inc. You may not copy, reproduce or distribute this content without the prior written permission of Oxford University Press, Inc., New York, NY.
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