Edgar's Health Care Reform Leaves Out Uninsured

By: Paul F. CuadrosGov. Jim Edgar's health reform package targets full time workers who already have insurance, but offers no relief for nearly 400,000 Illinoisans, according to an analysis by The Chicago Reporter.

Edgar will introduce legislation this spring that would provide insurance for workers who either lose or change their jobs. He has also proposed that small businesses create health insurance "pools" for their employees.

But Edgar’s plan makes no provision for the 385,000 Illinoisans working part time or not at all. About 1.2 million state residents under age 65 had no health insurance in 1990, the most recent data available, according to the Urban Institute, a nonprofit research organization in Washington D.C.

Seventy-five percent of white residents are insured by their employers, compared to 41 percent of minorities.

"The whole point is to deal with the uninsured and the underinsured, and if you're not dealing with those issues adequately, you're not dealing with health care reform," said Douglas Dobmeyer, executive director of the Public Welfare Coalition.

While Edgar supports universal coverage, the state cannot afford to insure everyone without federal help, said Felicia Norwood, the governor’s executive assistant for human services.

"These two issues were things that are doable" now, Norwood said. "They are aimed at improving coverage for small employers and individuals who work for small employers, and they are manageable."

The insurance industry would be the biggest beneficiary of Edgar's plan, since he would create new customers for insurers without imposing price controls, said Robert Creamer, executive director of the Illinois Public Action Council.

"They want to keep the spigot open so they can make millions off the misery of people," he said.

Norwood conceded that insurers would benefit, but added: "I don't see it as more clients for the insurance industry. I see it as more coverage for people who currently don't have it."

No Frills
To put his plan into action, Edgar turned to Philip R. O'Connor, the new chairman of the Illinois Health Care Reform Task Force. The 45-member group was created by the General Assembly in 1992 to examine the state's health care system and suggest ways to control costs.

O'Connor, a managing director of Palmer Bellevue, a division of the accounting firm of Coopers & Lybrand, served as director of the Illinois Department of Insurance from 1979 to 1982.

"The governor's point is that this big debate at the national level will happen," O'Connor said. "So rather than doing a shadow dance, let's see what we can do now."

In March, the task force released its preliminary report. It recommends that full-time workers who lose their jobs be allowed to buy insurance from their former employers. Employers would be required to offer a low-cost, no-frills plan, but they would not be required to pay for it. For some, the proposal also would reduce or eliminate the waiting period between policies.

This alternative would still be cheaper than COBRA, the federal plan in which workers can pay the full cost of their insurance for up to 18 months. For example, a state worker with two dependents and a salary of $21,400 pays $145 a month. Under COBRA, the same worker would pay monthly premiums of $487, according to the state insurance department.

Under Edgar's plan, the worker's premiums would fall somewhere in between.

"It will help people who are working at an insured job and are likely to go to an insured job," said Deborah Chollet, associate director of the Alpha Center, a Washington health policy think tank. "Basically, for this to help you, you have to be insured."

Bare bones plans in other states have not done well because they don't provide the kind of coverage people want, according to a July 1993 study by the Families USA Foundation, a health reform group based in Washington, D.C. The foundation supports universal coverage. Illinois and 15 other states have offered such plans for at least six months. In 11 states, fewer than 300 people have signed up; in Illinois, 28 policies have been sold.

"I think all it will do is probably make a few people who are working and have insurance feel better about changing jobs," said Richard Sewell, executive director of the Chicago Health Policy Research Council at the University of Chicago. "It's a very small response to a very large problem," he added.

Working Poor
Edgar's second proposal would allow small businesses to create employee pools to reduce health insurance costs, a practice now prohibited under state law. Companies could then offer coverage to their employees, but the firms would not be required to pick up the tab.

"Even though the price may come down 15 percent, it's still up to the worker to come up with 100 percent of the payment," said Jim Duffett, executive director of the Campaign for Better Health Care in Illinois, which supports universal coverage. "For the working poor, they can't afford to pay even with a 15 percent reduction," he said.

In 1990, 7.3 million Illinoisans lived in families with incomes that are twice the poverty level of $13,359 for a family of four, according to the Urban Institute. Of those, 84 percent got insurance through their employers, and only 7 percent were uninsured.

By contrast, 63 percent of the 1.4 million Illinoisans living below the poverty line were on Medicaid, and 20 percent were uninsured.

Those caught in the middle can't rely on their jobs or the government, the figures show. Only half were insured by their employers, another 8 percent were on Medicaid, and 26 percent had no insurance at all.

"I've got two children at home and I need insurance bad," said Anthony Nikas, who tends bar at Mother Hubbard's, a sports bar at 5 W. Hubbard St. Nikas has been without insurance for a year. "If something happened to me or one of my kids, I'd be dead." The bar has seven employees.

Some small business owners say they would like to take advantage of pooling. Perry and Valeria Krillis employ six people at Designs by Valerry, 4410 N. Ravenswood Ave. The company makes costumes for dancers and figure skaters.

"We can't afford to give them full benefits," said Perry Krillis. But a state subsidy would help, he added.

Edgar's plan offers no such funding. "One of our limitations is we were not in the business of spending money,' O'Connor said. "If subsidies were required, I wouldn't be against that," he said.

Even with a subsidy, many small businesses may not participate. The number of small firms offering insurance increased by only 3.5 percent under a pilot subsidy program in the state of New York, according to a 1989 study commissioned by the state's health department. The state paid half the cost of insurance; employers paid the rest.

Campaign Strategy
By focusing on insurance reform, Edgar is looking for a legislative victory to boost his bid for a second term, said David Rudd, spokesman for state Sen. Emil Jones, a South Side Democrat and Senate minority leader. "These are election year approaches to the problem," he said.

Edgar announced the insurance reforms in his Jan. 12 State of the State address, and then asked the task force to recommend legislation by April 1.

The proposals pose little risk to the insurance industry and are likely to create more customers. There are no mandates for premium caps or other restrictions. Businesses would not be required to spend more money.

And doctors support the plans because "these are things that can be done immediately," said Dr. Arthur R. Traugott, president of the Illinois State Medical Society.

Norwood defended the plans, saying they were "never meant to be a comprehensive answer to the uninsured."

Medical and insurance interests carry tremendous clout in Springfleld. From 1991 to 1992, the Independent Insurance Agents political action committee contributed $146,000 to state lawmakers, including $36,000 to the General Assembly's top four leaders, according to the 1994 Almanac of Illinois Politics. About $120,000, or 82 percent, went to Republicans, according to the almanac, which is published by Sangamon State University.

The state medical society was the top contributor to Illinois legislators, giving $1.48 million-two-thirds to Republicans.

Both groups have made large contributions to Edgar's political fund, according to campaign records. Between May 1989 and December 1993, insurance interests gave $51,200 to Edgar. The medical society gave about $175,000.

Edgar's insurance initiatives don't satisfy task force members who are pushing other reforms, such as increasing the number of primary care doctors in poor and rural areas. And while the General Assembly had directed the panel to propose Medicaid reforms, Edgar did not seek its advice before he proposed refinancing $1.4 billion in Medicaid debt and moving recipients into managed care.

"It looks like a way of derailing radical changes in the health care system," said Sewell of the University of Chicago, who sits on the task force's access committee.

Once the insurance plans are completed, the task force will "shift back to more substantive health care issues," O'Connor said.

Legislative Agenda
Edgar's proposals will pass easily in the General Assembly, said Mark Gordon, spokesman for Senate President Philip.

"These things will receive pretty favorable review in the Senate. All the governor's initiatives will have a very good chance this year, unless they get hung up in the House," he said.

House Speaker Michael J. Madigan, a Chicago Democrat, is "waiting to see what the governor will propose in detail," said spokesman Steve Brown. "All we have is language from the speech."

The only other reform measure the General Assembly is considering is the Health Securities Act, which would require lawmakers to develop a plan for universal coverage within a year of its passage. The measure failed to pass the House last year and did not get out of committee in the Senate.

Democratic gubernatorial candidate Dawn Clark Netsch said Edgar hasn't done enough to prepare for the universal plan that is expected from Congress within the next year. But her solution is to create another commission that would develop a plan by 1996.

State legislators should act now, said health care reform advocate Jim Duffett. "Put your plan on the table so we can go forward," he said. "It's put up or shut up time, folks."

Interns Mary Abowd, LaRissa Lynch, Joy Sterner and Judith Zimmer helped research this article.