Wellness Gap

March 25, 2008

by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Ali Frick, and Benjamin Armbruster Contact Us | Tell-a-Friend | Archives | Permalink

HEALTH CARE

Wellness Gap

According to a recent economic outlook by the Center for American Progress (CAP), "[r]eal hourly and weekly wages in January 2008 were lower than at any point in the previous 15 months," and for the last seven years, real weekly wages have remained flat -- "only 0.8% higher in January 2008 than in March 2001." Additionally, the share of Americans with employer-provided health insurance dropped from 64.2 percent to 59.7 percent from 2000 to 2006, and people are paying more for transportation, utilities, food, and medical care. Indeed, working-class Americans -- "who were down on the economy long before the word recession was uttered" -- are seeing skyrocketing health care costs "whacking away at their wages." Employers are also feeling the pinch, paying more for health care, which leaves less for their employees' wages. But the economic situation in the U.S. is having another adverse affect on Americans' health. New research from the Department of Health and Human Services (HHS) shows "large and growing" disparities in life expectancy for richer and poorer Americans which has paralleled the growing gap of income inequality over the last 20 years.

RISING HEALTH CARE COSTS, LOW WAGES: A September 2007 report by the Kaiser Family Foundation found that family health care premiums increased 78 percent since 2001, while wages increased only 20 percent. The Washington Post recently reported that "[e]ven though workers are producing more, inflation-adjusted median family income has dipped 2.6 percent -- or nearly $1,000 annually since 2000" as a result of rising health care costs. Service Employees International Union vice president Katherine Taylor said that because of souring health care costs, "[t]here are people out here making decisions about whether to keep their lights on or buy a prescription." Additionally, employers are paying more for health care. The Labor Department reported this month that a higher percentage of employee compensation costs is going to benefits rather than wages. A recent study on employer-based health care found that "job-based insurance premiums have risen by 98 percent between 2000 and 2007." While one CAP study found that "ever-escalating health care costs are placing a huge strain on employment-based health insurance," a National Association of Manufacturers survey last year similarly said that 90 percent of respondents "named the cost of health insurance as one of their top-three worries -- ranking it higher than government regulation, competition from imports or finding qualified employees."

THE LIFE EXPECTANCY GAP: With health care costs eating away at working Americans' wages, the the life expectancy gap is widening between rich and poor. HHS research shows that 20 years ago, "people in the most affluent group could expect to live 2.8 years longer than people in the most deprived group." But by 2000, "the difference in life expectancy had increased to 4.5 years...and it continues to grow." HHS researcher Dr. Gopal K. Singh added that the "life expectancy was higher for the most affluent in 1980 than for the most deprived group in 2000." What explains the widening gap? Researchers noted that "lower-income people are less likely to have health insurance, so they are less likely to receive checkups, screenings, diagnostic tests, prescription drugs and other types of care." Moreover, affluent and higher educated Americans are more likely to utilize advances in medical science and technology.

CONSERVATIVE FUEL TO THE FIRE: Both Sens. Barack Obama (D-IL) and Hillary Clinton (D-NY) are addressing the root cause of the disparity in life expectancy by making expanding health care coverage and reducing costs central to their presidential campaigns. However, in following a flawed conservative approach to health care, Sen. John McCain (R-AZ) plans to free insurance companies from state regulations, a move that would ultimately "reduce costs for insurers at the expense of people." His plan relies on high-deductible insurance policies tied to tax-preferred savings accounts or Health Savings Accounts (HSAs). Families or individuals will draw from the HSAs to pay the high deductibles. McCain's theory? Let Americans use their own money to choose "quality" health care. But in reality, there is little information available on health care cost and quality, while about two-thirds of firms do not make a contribution to HSAs for single coverage and about half do not contribute to HSAs for family coverage. The result is that McCain's plan would raise families' costs for less care. At the same time, McCain would raise taxes on all Americans with employer-sponsored plans. Indeed, HSAs make insurance companies a lot of money. McCain's health care plan "isn't about improving quality. It's about supporting the insurance industry." CAP has put together a progressive prescription for guaranteeing every American's right to affordable, quality health coverage.