Uninsured Liability

The state could lose millions by not providing healthcare for poor working parents.

By Linda Lutton

In 1978 the Unicut Corporation, which has been producing carbide-tipped saw blades in the Ravens-wood industrial corridor for 33 years, paid $24 per month for health insurance for each of its employees and their families. “And it was good insurance–everything covered,” says Maria Kolb, who helps her husband run the business.

Costs rose, and a couple of years later Unicut stopped paying for family coverage, though it still offered employees the option of paying the premiums themselves. But costs kept rising. Today, Kolb says, Unicut pays around $200 per employee every month for health insurance. Just one of the company’s 27 employees pays for spouse or family coverage, and Kolb says she knows some spouses and families are simply going without.

“Family insurance is the first to go,” says Jennifer Pritchard, who works at the Jane Addams Resource Corporation, a nonprofit that provides technical assistance to small manufacturers and their workers in the Ravenswood corridor. In the last few months she’s interviewed 20 companies, whose employees pay an average of $272 for family coverage. “These are employees that are making entry-level wages–on average, $7 an hour,” she says. “Most workers don’t use the family plans, because they just can’t afford it.”

These employees may be in for some relief if Pritchard and others succeed in getting the legislature to approve a program that would provide health insurance to some 200,000 uninsured workers in the state. Dubbed FamilyCare, the legislation would expand the state’s KidCare program to include parents of covered children–a change the federal government, which provides 65 percent of the funding for the program, began allowing last summer. Workers whose employers offered family coverage would get a subsidy to make their premiums affordable, and workers whose employers didn’t would be covered by the state-administered program. Its benefits would apply to people who make between $8,000 and $31,500 (for a family of four), or up to 200 percent of the federal poverty level.

Seventeen states now offer some version of FamilyCare, and many of them use general revenues to pay for the adults. But three states have already started using KidCare funds to insure parents, including Wisconsin, whose former governor, Tommy Thompson, now oversees the program as U.S. secretary of the Health and Human Services Department.

KidCare began in 1998 as a state health insurance program for children of the working poor, kids from families that make too much to qualify for medicaid but not enough to pay for private health insurance. The program got off to a dismal start in Illinois–after one year and millions of dollars, administrators had signed up only 30,000 of an estimated 190,000 eligible kids. Enrollment has climbed steadily since and now stands at 146,000.

But last year Illinois lost $69 million because it still hadn’t enrolled enough children to meet the federal goal, though Congress later gave the state a second chance to spend $44.5 million of that money. The lost millions didn’t stay in Washington; they were sent to states that had done a better job of enrolling kids, such as New York, Indiana, and Wisconsin.

Sara Feigenholtz is the lead sponsor of the FamilyCare legislation in the house, and last week her bill expanding the pool of people covered by KidCare sailed through on a unanimous, bipartisan vote. But supporters say the real challenge will be persuading enough senators and the governor to support it. Ryan could have included a line item for FamilyCare in his budget proposal but didn’t, though Department of Public Aid spokesperson Jo Warfield says it was because of “fiscal pressures and not philosophical difference.”

Warfield doesn’t seem particularly impressed that the feds pay for two-thirds of the program. “You still have to put up that one dollar to get those two,” she says. And she doesn’t like to say that Illinois lost federal money: “I want to say, ‘We were not able to claim.'” She adds that if the federal government were to reimburse more of the state’s medicaid expenses perhaps money could be freed up for FamilyCare. But Feigenholtz says, “The state of Illinois has a $50 billion budget. This is not a matter of whether or not we have the money–it’s a matter of priorities. Sixty-five cents on the dollar from the federal government is nothing that you want to shake a stick at.”

Many observers believe the state will continue to lose federal funds unless it can enroll adults as part of the current program. “If we don’t expand KidCare to cover parents we’re going to leave something like $200 million of our Illinois KidCare allotment in Washing-ton–and that’s just in the next two years,” says John Bouman of the National Center on Poverty Law. “The allotment that Illinois gets to cover children is calculated in a way that we’ll never be able to use it if we only cover children, just because of the way the formula is set up.” Feigenholtz adds, “The thought of sending $200 million back to the federal government unspent so that a state like New York can use it is just unacceptable.”

The center estimates that FamilyCare would cost the state around $7 million the first year and around $63 million per year after that. But Bouman says that’s a lot cheaper than having people use emergency rooms for their health care. “In 1998 Illinois had $1.6 billion of uncompensated care in hospitals,” he says. “That gets passed on to you and me. Blue Cross-Blue Shield estimates that 3 to 5 percent of the premium costs for people with insurance are due to cost shifting by the hospitals to make up for their uncompensated care.”

FamilyCare supporters have encountered almost no ideological opposition to the notion of the state paying the health care costs of lower-income working people. Even the Chicagoland Chamber of Commerce and Blue Cross-Blue Shield of Illinois have endorsed the bill; insurance companies stand to benefit from its passage because more employees would participate in employer plans and because costs would be lower if the pool of the insured became healthier.

The bill’s supporters–led by the citizen group United Power for Action and Justice, of which Kolb, Pritchard, and Bouman are members–have organized a rally this Saturday, March 31, from 10 to 11:30 AM in the James R. Thompson building. They’re predicting that 1,000 people will show up, among them religious, labor, and business leaders; representatives from the health care industry; and workers who could benefit from FamilyCare. The organizers hope to recruit people to go door-to-door drumming up support.

Feigenholtz thinks FamilyCare supporters have their work cut out for them in the senate and the governor’s office. But she hasn’t given up hope, saying, “We just have to keep making a lot of noise.”