The “Bush boom” finally brings jobs to the working class . . . with no benefits:
The economy started creating jobs again last year, but the number of working-age adults who went without health insurance for more than a year jumped sharply, the government reported Wednesday.
An additional 2.6 million people ages 18 to 64 were uninsured for more than a year, raising the total to 24.5 million, according to the federal Centers for Disease Control and Prevention.
. . .
The increase in the number of long-term uninsured, which Robin A. Cohen of the statistics center called “quite a significant jump,” underscored the chronic nature of the problem and the decreasing likelihood that a job guaranteed access to health insurance, analysts said.
Unsurprisingly, a leading contributor to the lack of coverage is cost:
Kate Sullivan Hare, executive director of health policy for the U.S. Chamber of Commerce, said rising healthcare costs were making it more difficult for employers of all sizes to offer coverage to workers. As businesses that still offer health insurance pass on more of the costs to employees, greater numbers of workers are deciding that the coverage is not worth the cost, she said.
Health insurance premiums that employed Americans pay for family coverage have increased by almost 50% over the last three years, according to the Kaiser Family Foundation, and voters questioned in public opinion polls consistently cited rising healthcare costs and worries about losing health coverage among their top concerns.
But there is a bright economic spot here. Despite the decline in customers, there’s no need to shed tears for the health insurance industry. They’re doing quite well, thank you very much:
By the end of 2000, revenues were rising faster than expenses and operating margins swung into the black, according to Sanford Bernstein, a Wall Street research firm. By 2003 they had reached 5.1%, possibly an all-time high. That may sound low, but health insurers have huge operating leverage. They do not have to finance inventory. Quite the opposite, in fact: they receive premiums up front and pay out later. Although capital demands in health care are enormous, they are mostly the responsibility of hospitals and labs, not health insurers, whose investments are limited to the technology needed to accept or reject claims. Unlike life and property-and-casualty insurers, health-care insurers have no long-lasting liabilities. Their obligations usually last no more than one year. As a result, margins in the mid-single digits can produce returns on equity in the mid-teens or higher.
Accordingly, insurance shareholders and executives have been handsomely rewarded:
Shares of health insurers bottomed in early 2000�as it happened, just when tech stocks reached their peak. Since then, the prices of many have quadrupled. And if shareholders have done well, executives have been more than amply rewarded, according to Graef Crystal, a compensation expert. Presumably, boards judged that the industry-wide resurgence was the product of their companies’ individual strokes of genius. William McGuire, head of UnitedHealth Group of Minnesota, earned $30m in pay in 2003 and exercised $84m in stock options from earlier years. This left him with options worth $840m at the company’s current share price. Mr McGuire’s number two, Stephen Hemsely, earned $13.7m in compensation and holds options worth $350m. John Rowe, the head of Aetna, earned $16m, Larry Glasscock of Anthem $51m and Leonard Schaeffer of WellPoint $27m.
So, in short, working class people are being hosed, while the upper-tier folks are prospering.
Looks like the Bush economic plan is in full effect.
