Layoffs expose new hole in health care safety net
Middle classes left strapped by coverage gap
On that December evening, Shaun Conley walked through the door of his pretty brick house in The Woodlands, scooping up kids as they ran to him. His smile stayed bright through dinner, through baths and story time, never once betraying the churn in his gut.
“How was your day?” his wife, Christie, asked.
Fine, Shaun replied, as he had a thousand times before. Only later, after their three children were asleep, did he begin to fall.
He pulled his bewildered wife into their bedroom and closed the door.
“We need to talk,” he began, swallowing hard. “I was laid off today.”
In truth, it was not a complete surprise. Tens of thousands of people in the region’s decimated oil and gas industries have lost jobs since the price of crude went into free fall. Still, his wife paced the room, cursing Baker Hughes, the global oil service giant and the only company for which 37-year-old Shaun had ever worked.
He told her they would be OK. She repeated it back
predawn darkness, neither could sleep.
For Shaun, despair and math collided. How long would their savings last? Could they keep the house? Had he failed his family?
Christie was battling another panic, hers coming in a single thought: What will they do for health insurance?
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It is a uniquely American predicament that strikes its middle class the hardest.
The Affordable Care Act has provided insurance to millions of poor and near-poor in recent years, but an unanticipated coverage gap has emerged for the middle and upper-middle classes. When people who once had good jobs with good health plans lose both, they suddenly are seen as too affluent to qualify for assistance yet in reality are too strapped to afford the policies available in the individual market.
“In the U.S., losing your job could mean losing your health insurance. Most other countries don’t do this,” says Jessica Roberts, director of the Health Law& Policy Institute at University of Houston’s Law Center.
There are options for people like the Conleys, but none of them is good. For them, the safety nets of this country fail to catch.
The most common advice is to turn to COBRA, a federal program that allows unemployed workers to keep their previous employer-based coverage. Some say it is well named because of its bite.
People who use COBRA often must pay for the entire premium of typically expensive policies without any employer contribution plus an additional administrative surcharge. That can bring premiums for a family well in excess of $1,000 a month, and they usually run out in 18 months.
“The ACA, if anything, entrenched our dependence on employer-provided health insurance,” Roberts says, explaining that under the law large companies are now mandated to provide health coverage, which perpetuates the cycle. “This is what we get when we link health insurance with employment.”
It wasn’t supposed to be like this. The majority of people in this country get their health insurance through their jobs, a perk that began in the post-World War II era and became deeply ingrained in the nation’s workplace culture. When the ACA passed in 2010, the assumption was that those without employer plans could turn to the health care exchange for affordable coverage.
Premiums would stay affordable because people with modest means could get subsidies to lower the price. The higher income brackets could afford to pay out of pocket.
But in the years since the law passed, coverage has narrowed, deductibles have risen and insurers have demanded double-digit rate increases in the individual market to counteract losses they say blindsided them.
Those with subsidies have been mostly shielded. But for those who don’t qualify, health coverage is becoming increasingly out of reach.
“That’s the hole,” Roberts says. “It is contrary to the spirit of the law.”
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Nowhere is that hole sinking faster than in Houston, a city built on oil and gas.
In the summer of 2014, crude oil was trading at $107 per barrel. Salaries and benefit packages were sky high to woo the best. Then came the crash, swift and brutal. Today, the price of oil has been slashed by more than half.
Last year alone, nearly 50,000 people in the Houston area, roughly the population of Biloxi, Miss., saw their energy-sector jobs vanish, says Bill Gilmer, an economist and director of the Institute for Regional Forecasting at the University of Houston.
On Dec. 3, Shaun Conley became one of the Houston 50,000.
Late in the afternoon, his boss texted him, asking to meet in the conference room. When Conley arrived, the first thing he saw was a woman from human resources with a blue folder. Everyone knew what the blue folder meant.
Shaun had worked for Baker Hughes for 15 years, hired out of college to work on an oil platform in the Gulf of Mexico. He rose to operation manager in a glass office making just over six figures. When he returned to that office that day, two boxes for his belongings were waiting for him.
As he began working on his résumé, his wife began working the phone, looking for health insurance.
Christie, a stay-at-home mother of children ages 5, 3 and 1, has severe allergies treated with immunotherapy injections. The company insurance plan, extended for three months as part of Shaun’s severance package, ran out early last month. Christie’s treatments will last until the end of April.
She first turned to the federal exchange’s special enrollment period. But because a lump sum severance payment landed in January, the family income for this year is considered too high for a subsidy — even though neither is working.
The kind of coverage she hoped for cost about $1,200 a month out of pocket on the exchange.
But even if they paid it, none of the children’s doctors are in-network on any exchange plans. Christie’s doctor told her he would not accept any plans off the exchange because they are too narrow and won’t allow referrals for tests and treatments convenient for his patients.
Christie then looked to the private individual market. One plan’s premium was $1,300 per month and had a yearly family deductible of $13,000.
She found a more affordable option, an à la carte plan offered through Private Healthcare Systems that her doctor accepts. The stripped-down offering cost about $600 a month but allows only three “sick” visits each year per person. There is no coverage for checkups for her children or preventive care.
Still, she figured she could take the kids to community clinics for their immunizations since the state of Texas offers those for free.
Then she discovered the plan is not accredited under the health care law. That means the family would face a $2,300 penalty for being “uninsured.”
Which left COBRA. The Conleys now pay $1,740 per month — more than their mortgage payment.
They know they are luckier than some. They stockpiled savings, and the children’s grandparents have stepped in to pay for the extras of childhood like swim lessons and preschool. But the bills keep coming. Money is tight and getting tighter. Starbucks is now a luxury.
Christie was a teacher before kids. She could do it again but is not certified in Texas. Even if she found a teaching job, day care for three young children would run nearly $3,000 a month, erasing most if not all of her paycheck.
Shaun has sent out hundreds of résumés. Looking for work fills his days. Each Wednesday morning he drives to the North-West Bible Church in Spring to the Between Jobs Ministry.
These days, he says, ministry meetings get so crowded “they are hanging from the rafters.” Four hundred is not uncommon, many in suits and ties, clutching résumés to press into the hands of anyone who will take them.
Shaun has sent out hundreds of résumés. He had one interview in four months and didn’t get the job. He’s starting to look in other fields.
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Texas continues to lead the nation in both the number and rate of uninsured, with as many as 5 million lacking coverage. If the oil industry collapse continues, that number could rise.
“This would be an entirely different population,” Roberts says.
“It’s not like people want to be uninsured. Most people would love to have insurance,” says Amanda Shiller, a 37-year-old Magnolia mother of two, sitting outside her mother’s auto repair garage, where she now helps out.
As a senior buyer making $74,000 per year, she had dodged the layoffs that swept through Canrig Drilling Technology last January and April. On Oct. 20, it was her time to go. She remembers the dread of seeing a woman from human resources already there at 6 a.m. The police were parked outside in case anyone got too angry.
Shiller’s health insurance expired at midnight. She rushed to the drugstore and filled her prescriptions while she still had coverage. She has a thyroid condition, attention deficit hyperactivity disorder and bipolar disorder.
She used to have “spells” when she felt irritable, her brain racing. Then she fell into deep remorse.
“The medication was like an immediate fix. I feel like I’m myself all the time. I feel normal,” she says, adding that her conditions did not interfere with her work when on medication.
Her husband, Josh, works for his stepfather’s law office doing administrative work, but the job pays less and does not offer insurance. With her income and insurance gone, they could not afford $1,600 per month for COBRA. She looked online at the exchange plans but initially thought they, too, were too expensive. She found an off-exchange plan for about $450 a month, but it did not cover her $1,200-permonth prescriptions.
She considered skipping insurance. She has friends who now do that. She fig- ured that with online pharmacy coupons she could get the price down and it would be cheaper to pay out of pocket even with the penalty for being uninsured. But her son plays sports, and his teams require insurance.
So with credit cards maxed out and bills piling up, she began rationing pills.
“I would skip doses or take them every other day to make them last,” she admits. When she stopped taking them entirely in late March, she felt the agitation creeping back. Stress makes her condition worse.
Earlier this month, she returned to the exchange. This time she called instead of logging on and was told her family qualified for a subsidy to reduce the premiumto $483 per month.
She cashed out her entire 401(k) retirement account to pay off the truck, an old construction loan and all of the credit cards. When her unemployment runs out in Ma, y she thinks they probably can make it.
“I still view myself as middle class,” she says, “But life is changing for us.”