Health Care Has a Relapse

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Dalton Dawes draws an injection of Mononine

For most children, a hug is all it takes to treat the bruise from a playground fall. But when Dalton Dawes collided with a classmate on his first day of preschool three years ago, the bleeding inside his shoulder would not stop. Dalton, an 8-year-old with fine blond hair and intelligent blue eyes who lives in North Carolina's Blue Ridge Mountains, is a hemophiliac. What prevents the mishaps of childhood from killing him is $2,000-a-week injections of a medication called Mononine. But no private insurer will cover Dalton, so his parents, Leonard Poe and Heather Dawes, held their income to $22,900--33% over the poverty line--to qualify for Medicaid.

That worked until March 2001, when Dalton turned 7 and his Medicaid eligibility ran out. (For him to stay in the program, his parents would have had to earn no more than $15,492 a year.) Heather, a paralegal, tried to enroll him in the Children's Health Insurance Program (CHIP), a state-federal initiative that provides coverage to children of working families. But North Carolina had burned through all the money allocated to CHIP that year, so Dalton joined 23,000 other kids on a waiting list. By the time legislators found the $8 million needed to resume enrollment last September, Dalton was down to his last three weeks' supply of Mononine. After months of seeing her son's survival in the hands of politicians and bureaucrats, Heather could not stop thinking about "how flimsy it all is." She notes, "They could decide to set it aside tomorrow again if they wanted."

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In 13 other states, from West Virginia to Hawaii, lawmakers are talking about cutting funding, narrowing eligibility or placing restrictions on CHIP. And that's just one small part of what the new health-care crisis looks like across America. In California nurses are leaving hospitals to take jobs at Starbucks and Macy's because the benefits and working conditions are better, and hospitals are so understaffed that patients' families are answering phones on the wards. In Arkansas lawmakers cut a deal last week to preserve Medicaid benefits, after protesting parents wheeled their disabled children into the statehouse. In Idaho parents angry over proposed cuts in the state's already skimpy health program sent their children to the Governor's office with valentines pleading DON'T BREAK OUR HEARTS. Tennessee's health plan, hailed only a few years ago as a national model for covering the working poor, is falling apart as its cost approaches $6 billion a year. As many as 500,000 people may be dropped. In Florida a 1999 state Chamber of Commerce survey found that 91% of businesses provided health insurance for their employees; by last fall, the figure had dropped to 77%.

One measure of popular passion on the subject is that the movie John Q.--in which Denzel Washington plays an underinsured father holding a hospital at gunpoint to get his son a heart transplant--was No. 1 at the box office during its opening weekend in late February. When the movie came out, the HMO industry's lobbying group bought full-page newspaper ads blaming Washington politicians for failing to address the problems of the uninsured. There's not much evidence, however, that anyone in Washington is paying attention. "While there's conversation going on," says John Engler, Michigan's Republican Governor, "it doesn't appear to us to be a very focused conversation or a very clear strategy to get something done."

During the 1990s boom, politicians could pretend that the problem was fixing itself. Health-care costs were being held in check. Private employers offered more and better health care to attract workers. The states were becoming more generous and creative in taking care of lower-income working people, who most often fall into the crack between private insurance and public-assistance programs.

Today, however, costs are soaring again, fueled by drug and hospital prices. Insurance premiums rose 11% last year, and are likely to increase an additional 15% this year. Because of the recession, employers are trimming or eliminating coverage even as an estimated 2 million Americans have lost their health plans along with their jobs. State governments, facing a collective deficit of $40 billion, can no longer afford the extra Medicaid benefits they began paying for a few years ago. "You can't just manage your way out of it anymore," says Engler. "The numbers are getting so big and it's growing so fast that it's just dwarfing our efforts."

No one expects the Governors to get anything close to the $6 billion in federal aid they were asking for last week to cover this year's Medicaid shortfalls. Mississippi may be in the direst straits; its Medicaid program ran out of money entirely last Friday, as lawmakers argued over an array of unpalatable options, ranging from a 5% reduction in doctor reimbursements to sharply cutting back on services.

For all the promises politicians of both parties made in the last election about providing prescription-drug coverage for the elderly, President George W. Bush's recently unveiled budget includes only $190 billion for prescription-drug subsidies over the next decade--a figure that even Republicans say is woefully short of what's needed. Few believe there will be a prescription-drug program this year. "The truth is that Bush's tax cut killed the possibility of a prescription benefit," says Vermont's Democratic Governor, Howard Dean, who is also a physician and is considering a run against Bush in 2004. "He's not serious about it, and the Congress doesn't have any money." Bush tried once again last week to put forward a plan to sanction private drug-discount cards for seniors, but drugstores are fighting it, and most experts say it's a gimmick that would mean only 10% to 13% in savings.

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