Universal Coverage Is Within Reach, If the Pain Is Shared Equitably

Ten years ago, a vicious cycle of rising prices and declining access forced health care to the top of the national agenda. Now that destructive spiral is spinning again -- with the same result.

Everywhere signs are proliferating that the health-care system is breaking down under the same pressures that inspired President Clinton’s ill-fated crusade to guarantee universal coverage.

Three consecutive years of double-digit increases in health insurance premiums are straining employers and igniting conflicts with employees asked to bear part of the burden. Health-care costs have become a growing factor in labor confrontations, like the two bitter strikes underway in Southern California.

The rising costs are also compelling more employers to stop offering health coverage at all -- and more employees to decline it even when it’s offered. Since President Bush took office, the number of Americans without health insurance has soared by 3.7 million, to 43.6 million, the biggest two-year increase since his father was president.

These problems of cost and access are inextricably connected. It’s easy to see how rising costs translate into reduced coverage. But the reverse is also true. The growing number of Americans without insurance means that doctors and hospitals have to provide more uncompensated care that must be subsidized by the premiums of those with insurance. As Bruce G. Bodaken, chairman and president of Blue Shield of California, put it in a speech last winter: “In essence, we are charging the private health-care system a hidden tax, a tax that can’t be sustained....”

That should be the real issue in the current struggle over health-care costs. As a group, employers are getting a bad rap. Some may be trying to shift an inordinate share of the health-care bill to their employees. But the employers providing coverage are not, en masse, abandoning their responsibilities.

Employers who provide health insurance are not shifting a larger share of the premium cost to their workers, according to the definitive annual surveys by the Kaiser Family Foundation. In fact, the trend is slightly in the opposite direction. Ten years ago, employees contributed 32% of the cost for insurance; now the number is 27%, Kaiser found.

And while total out-of-pocket health-care costs for employees have jumped 50% in the last three years, that’s no faster than the rise in premiums paid by their employers, Kaiser’s surveys show.

The real issue is that costs are rising so fast that the burdens are growing unbearable for employers and employees. Controlling costs will require many steps, including slowing the rise in prescription drug prices. But most experts agree it won’t be possible to restrain health-care costs without significantly reducing the number of uninsured.

There’s no shortage of ideas for how to do that. But the real question in all of them is the bottom line: Who pays?

In the last few months, at least three distinct answers have emerged.

As he prepares to leave office, Gov. Gray Davis recently signed legislation that would impose the burden overwhelmingly on the businesses that don’t now provide coverage. The measure would require all firms in the state with 50 or more employees to cover their workers, or pay into a state fund that would provide insurance.

Reluctant to instigate such a political showdown with business, the Democratic presidential candidates are pushing plans that mostly would use taxpayer money to cover the uninsured. The most extreme example is the plan from Rep. Richard A. Gephardt of Missouri to provide employers a generous new tax credit to cover most of the cost of insurance. Gephardt’s plan not only rejects any new cost to businesses that don’t provide coverage today, it shifts to government, through the tax break, roughly one-quarter of the cost now paid by employers who do cover their workers.

Bush’s approach looks largely to the uninsured to meet the cost. He’s proposing a tax credit that low-income families without insurance could use to help buy coverage. But it would generally cover only half of their cost or less.

Each of these approaches has flaws. Bush’s plan asks the uninsured to bear such a large burden that few could afford coverage even with the credit; the best estimates are that Bush would reduce the number of uninsured by less than 10%. The plan from Gephardt (and to a lesser extent, proposals by his Democratic rivals) could impose unsustainable costs on the federal treasury. And the California legislation probably asks too much of the low-wage employers who don’t provide coverage, especially at a time when the economy is slow.

The answer is a more equitable sharing of the bill between government, employers and individuals. One guidepost should be the existing division of the tab: Today, individuals and government both contribute about one-third of the nation’s $1.6-trillion health-care bill, with employers chipping in about one-fourth and foundations and charities the remainder, according to analysis by Emory University’s Kenneth E. Thorpe.

Since the uninsured are overwhelmingly low-wage workers, they probably can’t pay as much as individuals now contribute overall, Thorpe notes. That means a sensible plan would allocate more of the cost to government and business (though not as great a share as California is imposing). One promising model might be the plan that Bodaken of Blue Shield proposed last winter that would impose a mandate on employers to provide coverage, a mandate on individuals to purchase coverage (which solves the problem of the young and healthy skewing the risk pool by opting out), and provide government subsidies for both.

In an economy that already spends $1.6 trillion on health care, the cost of universal coverage is almost trivial: about $75 billion more a year. But it won’t be possible to find those funds unless business, individuals and government all shoulder their share of the load.

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Ronald Brownstein’s column appears every Monday. See current and past Brownstein columns on The Times’ Web site at www.latimes.com/brownstein.