Health Care Subsidy Helps Some Jobless ( victims of cheap imports )

[MORTARDUDE]

Health Care Subsidy Helps Some Jobless

The Washington Post

December 31, 2003

Kirstin Downey, Washington Post Staff Writer

DATELINE: MARTINSVILLE, Va.

Robert Oakley, who supervised an overnight manufacturing shift at the Pillowtex textile plant here, was worried that he would lose his health insurance when the plant closed in July, a victim to cheap imports. In August, he was relieved to learn that a new federal program would pick up most of the cost, reducing his $355 monthly premium to $125.

"It's a blessing," said Oakley, 53, a diabetic who began receiving the assistance last month. The health insurance subsidy, authorized as part of a 2002 law, is the newest benefit for those who have lost manufacturing jobs to overseas competition.

Many other workers in this economically depressed corner of the state have not been as fortunate.

Kerielea Myers, 42, lost her job at a Martinsville day spa in August because laid-off textile workers had stopped getting manicures and facials. The same day, her husband, John, 48, lost his job as general manager of a chemical company that depended on the textile industry. They were told they would have to come up with $1,131 a month to keep their employer-sponsored health insurance -- a price they couldn't afford.

"It's hard to consider it fair," Kerielea Myers said. "We got no help from anybody in any way, shape or form." She and her husband were not eligible for the new benefit because foreign competition did not directly cause their job losses.

The new program covers about 260,000 jobless workers across the nation. They include steel workers in Maryland, Ohio and Pennsylvania, paper-mill employees in Maine, textile workers in Virginia and the Carolinas, and retirees whose pension plans have gone bankrupt. Besides getting a tax credit equal to 65 percent of their health insurance premium, certified workers also are eligible for extended unemployment benefits, career counseling, job-placement assistance, remedial education and retraining.

State unemployment officials, who see many of the beneficiaries face to face, say that many express gratitude, but have been put off by the paperwork and delays, and the expense of paying for even one-third of their health insurance.

The Martinsville-Henry County area, once known as the sweatshirt capital of the world, has suffered a rapid economic decline as employment shifted overseas. It has lost about a quarter of its 40,000 jobs in the past decade. Once proud of its industrial might and strong work ethic, the region's unemployment rate is now 13.4 percent, the highest in Virginia, and more than double the national average.

Many workers here have lost their employer-sponsored health insurance as well as their jobs. In 1999, a group of doctors and nurses began volunteering their services once a week at a charity clinic operating out of an abandoned textile plant downtown, according to Cathy Philbrook, a nurse who helps run the clinic. The first year, it provided care for 66 patients; this year, the clinic has had 3,168 patients and patients line up outside hours before it opens, to improve their chances of seeing a doctor.

The federal government chose the Martinsville area as one of the first places to roll out the new program because of the level of economic distress there.

Officials said it is too early to estimate how many people will sign up for the federal tax-credit program nationwide. About 6,000 individuals qualified for early payments through November, receiving the money as an advance against tax refunds, they said.

The Joint Committee on Taxation estimates the benefits will cost the federal government $294 million in 2003, increasing to $500 million a year by 2008. First-year start-up and administrative costs are expected to cost another $25 million.

The new benefit does not cover workers who lose their jobs because of downsizings, cutbacks or mergers, even when their employers were affected by jobs shifting overseas. Computer programmers and other information workers do not qualify, even if their jobs moved to India or other low-cost labor markets, because they do not make a manufactured product. In fact, most of the nation's 8.7 million jobless are not eligible, at a time when health insurance has become unaffordable even for many employed workers.

"You get a lot of people asking for help, wanting it, but they are not eligible under federal law," said Mason Bishop, deputy assistant secretary for employment and training administration at the Labor Department. "It's one of the issues we've had to deal with from a federal perspective."

Administration officials said the program is a pilot project to test new ways of providing health insurance through tax incentives. "We're using it as a model or base that could be expanded to other eligible populations," said Roy J. Ramthun, senior advisor on health initiatives to Treasury Secretary John W. Snow. "We're trying to assess whether we would want to do it."

So far, programs have been launched in 25 states, with Maryland and Virginia among the first states to seek to participate. "Personally I think it's a wonderful first step," said Lynette Coughlin, a senior planner for the Virginia Employment Commission.

On average, jobless workers are paying $401 for individual coverage and $801 for a family of three, if they maintain their employer-provided coverage, an option if the company is still in existence, or $448 for an individual and $784 for a family of three if they instead choose a state insurance plan, according to government statistics.

"Very few people are able to afford the insurance," said Georgia Hairston, 54, of Fieldale, an unemployed former Pillowtex worker who has been told she would be responsible for one-third of the monthly premium of $705 a month. "People can't afford to pay the 35 percent. That would take up all my unemployment insurance money. . . . I don't know what they expect us to do."

Sarah Roberts, 53, worked for more than five years at a textile plant, and after it shut she accepted a temporary job at Pillowtex that lasted until it closed a year later. She does not qualify for the new federal program because she wasn't a regular employee and had no health insurance. Last month Roberts stood in the rain, waiting in line 90 minutes before it opened, to get an appointment at a charity medical clinic.

"I couldn't afford health insurance right now even with a price break," Roberts said. "It's sad it's come to this here."

Some people who worked side by side have found themselves on opposite sides of the health insurance divide.

Angela Woods, an accountant at VF Knitwear Inc., a sportswear manufacturer, lost her job at the nearby Bassett, Va., plant in May 2002 when the company began buying more goods overseas. She kept up her employer-sponsored health care insurance for 18 months at her own expense, and was about to let it lapse when she learned in September that the federal government would begin picking up two-thirds of the $471-a-month cost.

"I was surprised, but thankful," Woods said, though adding she was on the verge of letting her insurance lapse. Woods said she called the Internal Revenue Service hotline for help four times over six weeks, and couldn't get a "straight answer" about whether she was eligible. Ultimately, she went to state officials for help and her application was approved.

Woods's friend and longtime co-worker Linda Frasier, another VF Knitwear employee, did not qualify for the federal assistance because the program only covers those who still have insurance, and she dropped her coverage when she lost her job in June 2002.

"The insurance was $334 and the house payment was $368, so I kept the house," said Frasier, 59, who is a widow. She said that even if she had qualified she doubted she would be able to pay even one-third the monthly cost.

"It's a tough bit of information, when people learn they're not eligible," said Keith Taylor, director of the health coverage tax-credit program at the Internal Revenue Service. "The legislation provides rather tight definitions on eligibility . . . and we need to live within those requirements."

Administration officials said workers laid off at unionized factories have been most likely to learn about and apply for the benefit.

"It's hugely complicated and difficult to explain to people," said Phyllis Reynolds, a state unemployment official in the Martinsville area. "Some people in manufacturing are functionally illiterate and you need to explain it in a face-to-face meeting."

Government officials acknowledge they are on a steep learning curve in administering the new program. Labor Department officials are required to certify that the jobs were lost to imports and provide the links to state unemployment offices that explain the programs to affected workers. The Health and Human Services Department reviews eligible health insurance plans to make sure they meet federal standards. The Internal Revenue Service handles the tax-credit paperwork, determines eligibility and sends out the checks.

State officials have geared up to explain the program and make sure insurance plans conform to state laws.

In many states, insurers were not initially eager to participate in the program, fearful of being saddled with a large pool of aging or injured workers because they are not permitted to exclude workers with preexisting health conditions, federal officials said. Companies affiliated with Blue Cross Blue Shield have been the most active participants nationwide, officials said.

Oakley, the former Pillowtex supervisor, will receive the health care help for the next 18 months, while he retrains for a job as a respiratory therapist, but he is still worried. Now he wonders whether he will find a job in the Martinsville area, and whether it will have health insurance.

"We're losing so many jobs so fast, and though we're getting training there are no jobs to go around," he said. "Our jobs are being given away, they're importing people for our jobs, all so they can get it a little bit cheaper. Where's it going to end?"