Slump Spreads to Health Care as Michigan Loses Auto Jobs

[question everything]

JULY 13, 2009

Slump Spreads to Health Care as Michigan Loses Auto Jobs

By KATE LINEBAUGH
WSJ

TROY, Mich. -- The sputtering Michigan economy is dragging down the state's once-strong health-care system, offering a preview of how a lingering recession could corrode Americans' hospitals, savings and health... The erosion of Michigan's gold-plated health benefits, long the envy of workers across the U.S., is accelerating the state's downward economic spiral. Years of auto-industry layoffs and benefit cuts to white-collar retirees have left hundreds of thousands of Michigan workers like Mr. Markel without employer-provided health coverage. To adapt, individuals are drawing down savings to fund their own insurance, going without treatments or tests, or leaning on an increasingly strained state. The share of Michigan residents under 65 using public insurance such as Medicaid rose to 22% last year, from 11% a decade earlier.

These cutbacks, in turn, are devastating the health-care sector. Now the state's largest employer, health-care providers have swung from profit to loss. Hopes are fading that Michigan's hospitals and clinics can offset the car industry's decline: Even as waves of former auto workers are retraining as nurses, dental hygienists and X-ray technicians, the state's hospitals are freezing expansion plans and laying off workers. Unpaid bills at the state's hospitals hit $2 billion in 2007, twice the level in 2001, and continue to grow, according to the Michigan Health & Hospital Association.

Employer-funded insurance is a pillar of the U.S. health-care system, and Michigan's experience shows what happens when it begins to erode. The state provides an extreme example of what President Barack Obama's administration is trying to address as it seeks to reinvent national health care. Mr. Obama, who is expected to discuss health care on a visit to the state Monday, has championed a safety net that would reduce the cost of coverage for people who lose employer-funded insurance, keep costs lower for people with preexisting conditions, subsidize insurance for lower-income buyers and broaden Medicaid coverage. It's unclear how states and the federal government would divide the expense. Critics worry that state finances may be too strained to absorb any increase in health-care spending, particularly when times are bad. Advocates say the U.S. government can afford to provide a buffer so that Americans can stay insured without going broke, with federal health spending serving as a stimulus in hard times.

(snip)

But for the past 15 years, job losses have mounted in the auto industry, accompanied by cuts at advertising agencies, parts makers and retail shops. After six years of recession, the state has the highest unemployment level in the U.S., 14.1% as of May. The Michigan Senate Fiscal Agency expects the state will lose half a million jobs this year and next, with unemployment reaching 16.9% next year... Many residents in this state of 10 million have no health insurance -- 11.6% in 2007, up from 8.5% in 2000. Still more are choosing bare-bones policies that cover only extreme events.

(snip)

Michigan's auto companies long argued that they spent too much on health care to remain competitive. Those costs mounted, GM and others say, as treatments became more expensive and companies continued to fund insurance plans for employees who retired early. Critics of plans with broad coverage and low out-of-pocket expenses say that such coverage can encourage patients to seek unnecessary tests or treatments... As residents lose coverage, more are turning to state-funded care. Michigan's Medicaid rolls have risen 61% in the past decade to 1.7 million, according to state data. State officials expect the level to rise further as unemployed residents draw down their savings and qualify for the program. This, too, strikes a blow to the state's health providers, because Medicaid typically reimburses hospitals at lower levels than private insurers do. Meanwhile, Gov. Jennifer Granholm, a Democrat, has cut Medicaid reimbursements as the state tries to pay for the rising need in the face of shrinking revenues. The state coffers are so depleted, Michigan is in jeopardy of losing some federal matching funds for children's health care.

(snip)


http://online.wsj.com/article/SB124743926415729611.html (subscription)

[newfie11]

1. Not just in Michigan

In some South Dakota hospitals there is a hiring freeze. Wages are frozen and in several cases vacations are being cut. As a x-ray technologist I have never seen it this bad. I worked in hospitals in California, Washington DC, Petosky MI, Fredricksburg VA, Mattoon IL. and SD over a 40 year period. Never did I have trouble finding a job but now there are very few. Still some out there for ultrasound techs. My husband is a radiation therapist and they used to be in big demand. Now there seems to be very few jobs for them also. I am glad we are now both retired.

[Blue_Tires]

2. sad story all around

the WSJ continues to get orgasmic over the struggles in Detroit and other Democratic/union strongholds...

[question everything]

3. I don't know why you use such a description

The WSJ news are different from the editorial board and often provides excellent coverage of current news.

[Blue_Tires]

4. you're right, they are separate

but once in awhile (not in this story of course), the biases of the Ed. board can color the news coverage

[Wednesdays]

5. K&R

:kick:

[girl gone mad]

6. This article elegantly illustrates..

the flawed premise behind the concept of a service economy. We can't all be hairstylists, nurses, lawyers and sandwich artists. Some of us have to manufacture things that people need and that foreigners want to buy.

[newblewtoo]

7. your elegant post shows

You are so right, when we ship the jobs overseas the money goes with them. But note even those with a pension are not safe from the endless costs of private insurance.

Medicaid could be an option for Ron Andrews. The retired design engineer figured he would have insurance for life, and budgeted accordingly. Now, after losing his benefits through Delphi in March, he figures he can afford about one more month of insurance.

Mr. Andrews, 58, has diabetes, and his wife, Louise, treats her acute asthma with prescription medications. The best plan he could find costs him $840 a month, slightly more than the mortgage on his split-level house in Saginaw. Because of their pre-existing conditions, he says they would have to pay more for new coverage.

With a $2,400-a-month pension and a few thousand dollars in savings, he figures he could try to find someone to pay $8,500 or so for his small sailboat. Beyond that, he's afraid he may not be able to afford his house payments.

This example alone should convince any sane person that the system needs to be corrected, sooner rather than later.

[TexasObserver]

8. recommend this important topic and article