When health insurance isn't

November 30, 1992

Health care insurance is no longer a "fringe" benefit, if it eve was. It is an essential social need. When health care costs rise three times as fast as the general inflation rate, and when affordable insurance is ever more difficult to get, millions of workers now choose their jobs based on the extent of health coverage rather than on pay levels.

Employers faced with mounting health care costs have responded with cost-cutting measures. Many have turned to self-insurance, which virtually allows them to choose what workers and conditions they will cover, and for how much. Self-insured companies are exempt from state insurance regulations. If a catastrophic medical problem involves costly treatment, the employee's benefits can be quickly slashed to save money.

That's what happened to John McGann and Richard Owens, who happened to contract AIDS and faced expensive treatment for their illnesses. Their health coverage was then limited by their self-insured employers; they were without coverage when they needed it most.

The Supreme Court this month upheld rulings that self-insured companies have no obligation to maintain coverage for their sick employees. Health insurance rights are not vested or guaranteed.

In another case, a federal court ruled that an employer can fire an employee who filed extensive medical claims for her deathly ill newborn child.

Cutting these financial losses in matters of life and death is not illegal, even if it goes against every moral instinct and defies the definition of what insurance is supposed to do.

The problem is not self-insurance per se: two-thirds of America's major employers have gone that route to cut out middle-man profit of insurance companies. In fact, few of them coldly cut off coverage for catastrophic cases; those few are typically small firms without a safety net.

The answer is not in quick-fix legislation to force employers to bear unreasonable health care costs that could lead to bankruptcy and loss of benefits by all employees. Mr. McGann's small retail employer had, for example, paid full benefits for two -- other workers with AIDS before him. Perhaps a type of supplemental catastrophic insurance, subsidized by the government as is flood insurance, might provide some help.

But the essential fault lies in the nature of the U.S. health insurance system, created as an employer-provided benefit as a way to circumvent wage freezes a half-century ago. Leaving health care coverage to individual business decisions is no longer a defensible, just decision.

Health system reform has been repeatedly promised, but never delivered by politicians after election day. Next year offers a fresh chance to call the new president and the new Congress on their promises to ensure that health care is not denied when it is needed most.

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